You Have $1250 000 Invested in a Property Index,which Has

question 36

Multiple Choice

You have $1250 000 invested in a property index,which has a current value of 9000.0.If a put option is available with an exercise price of 11500,standard deviation of returns is 40%,time to maturity is 9 months and risk-free rate is 8% p.a. ,how many contracts are required for an exact hedge of this index? Assume an index point value of $10.00.

• A) 10
• B) 11
• C) 24
• D) 50

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Definitions:

Direct Ownership

A situation in which an entity has full control and claim over an asset, without any intermediaries.

Most Risk

A term that could be interpreted in various contexts, but it is not a standard business or marketing key term. NO.

Licensing

The granting of a right or permission by one party to another for the use of a product, service, or intellectual property.

Exporting

The sale of goods or services produced in one country to customers in another country.