Suppose That You Have Written a Call Option on €10,000

question 43

Multiple Choice

Suppose that you have written a call option on €10,000 with a strike price in dollars.Suppose further that the hedge ratio is ¹/₂.Which of the following would be an appropriate hedge for a short position in this call option?

• A)Buy €5,000 today at today's spot exchange rate.
• B)Agree to buy €5,000 at the maturity of the option at the forward exchange rate for the maturity of the option that prevails today .
• C)Buy the present value of €5,000 discounted at i€ for the maturity of the option.
• D)Agree to buy €5,000 at the maturity of the option at the forward exchange rate for the maturity of the option that prevails today or buy the present value of €5,000 discounted at i€ for the maturity of the option.

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Definitions:

Penile Stimulation

Physical stimulation of the penis, which can lead to sexual arousal and potentially orgasm.

Sexual Expression

How individuals express their sexuality, including behaviors, attitudes, and preferences.

Sexual Dysfunction

Disorders related to the sexual response cycle (desire, arousal, orgasm, and resolution) that cause significant distress or interpersonal difficulty.

Dyspareunia

A medical condition characterized by pain during sexual intercourse, which can be caused by physical or psychological factors.