Find the Hedge Ratio for a Put Option on $15,000

question 58

Multiple Choice

Find the hedge ratio for a put option on $15,000 with a strike price of €10,000. In one period the exchange rate (currently S($/€) = $1.50/€) can increase by 60% or decrease by 37.5% .

• A)-15/49
• B)5/13
• C)3/2
• D)15/49

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Definitions:

Share Exchanges

A process by which companies exchange their own shares with each other, often as a means of acquisition or merger.

Authorized

Having legal or official approval to do something.

Shareholder Approval

The process by which a company's shareholders give consent to certain decisions or actions proposed by the company's board of directors, often requiring a vote.

Merger Plan

A strategic proposal for combining two or more companies into a single entity to achieve business benefits.