The Black-Scholes Hedge Ratio for a Long Call Option Is

question 74

Multiple Choice

The Black-Scholes hedge ratio for a long call option is equal to ________.

• A) N(d₁)
• B) N(d₂)
• C) N(d₁) − 1
• D) N(d₂) − 1

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Definitions:

Multiplier

The factor by which changes in spending will affect the aggregate income level of an economy; often used in the context of the Keynesian economic multiplier effect.

Crowding-Out

A concept where increased government spending leads to reduced investment in the private sector, often due to higher interest rates.

Investment-Accelerator Effects

The phenomenon where an increase in national income or output leads to a disproportionately larger increase in investment expenditure.

Money Supply

The entire financial resource sum in an economy at a particular time.