The Hedge Ratio

question 72

Multiple Choice

The hedge ratio

• A)Is the size of the long (short) position the investor must have in the underlying asset per option the investor must write (buy) to have a risk-free offsetting investment that will result in the investor perfectly hedging the option.
• C)Is related to the number of options that an investor can write without unlimited loss while holding a certain amount of the underlying asset.
• D)All of the above

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Definitions:

Organizing Process

The method of arranging resources and tasks to achieve an organization's goals efficiently and effectively.

Management Hierarchy

The arrangement of individuals within an organization according to power, status, and job functions, creating a structured chain of command.

Supervisors

Individuals within an organization responsible for overseeing the work of others and ensuring tasks are completed effectively.

Line Organization

Organizational structure that establishes a direct flow of authority from the chief executive to subordinates.