Which of the Following Statements Is False

question 35

Multiple Choice

Which of the following statements is false?

• A) Out-of-the-money calls have the highest expected returns and out-of-the-money puts have the lowest expected returns.
• B) The expression SΔ/(SΔ + B) is the ratio of the amount of money in the stock position in the replicating portfolio to the value of the replicating portfolio (or the option price); it is known as the leverage ratio.
• C) The beta of a portfolio is just the weighted average beta of the constituent securities that make up the portfolio.
• D) The magnitude of the leverage ratio for options is usually very small, especially for out-of-the-money options.

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Definitions:

Chymotrypsin

A digestive enzyme classified as a serine protease, which hydrolyzes proteins to form smaller peptides, playing a critical role in protein digestion.

Peptide Structure

The sequence and chemical bonding of amino acids in a peptide, which dictates its three-dimensional shape and function.

Phenylthiohydantoin

An aromatic compound derived from the reaction of amino acids with phenylisothiocyanate, used in sequencing peptides.

Phenylisothiocyanate

An organic compound used in the Edman degradation method for sequencing amino acids in peptides.