For a Call Option,the Rate of Increase in the Share $0.10$

question 3

Multiple Choice

For a call option,the rate of increase in the share price is 2%,while the rate of decrease in the share price is 1%.If the share price increases,the call price is $10.10,while the call price will be $9.95 if the share price decreases.Given this information,and that the asset price is currently $10.00 and the risk-free rate is 5% p.a. ,calculate the risk-free hedge ratio.

• A) \( 0.10 \)
• B) \( 0.15 \)
• C) \( 0.17 \)
• D) \( 0.20 \)

---

Definitions:

Common Carriers

Companies that offer transportation services to the public under the authority of a regulatory body and are required to provide service without discrimination.

Common Law

Common Law is a legal system based on judicial decisions and precedent, as opposed to statutes or written laws enacted by a legislative body.

Warehouse Operator

An entity or individual responsible for managing the storage, handling, and distribution of goods in a warehouse.

Storage Contract

A legal agreement where one party agrees to store goods for another party for a period of time, usually against a fee.