A Hedge Ratio of 0

question 25

Multiple Choice

A hedge ratio of 0.85 implies that a hedged portfolio should consist of

• A)long 0.85 calls for each short stock.
• B)short 0.85 calls for each long stock.
• C)long 0.85 shares for each short call.
• D)long 0.85 shares for each long call.
• E)none of the above.

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Definitions:

Unit Costs

The expenditure a business faces for the production, storage, and selling of an individual unit of a given product or service.

Experience Curve

A concept suggesting that the more experience a company gains in producing a product or service, the lower the costs associated with it due to efficiencies.

Product Life Cycle

The stages a product goes through from development and introduction to the market, through growth, maturity, and eventual decline.

Marketing Mix

A framework consisting of the 4Ps: Product, Price, Place, and Promotion, used by businesses to market their products effectively.