The Following Information Is Given About Options on the Stock $\sigma$

question 32

Multiple Choice

The following information is given about options on the stock of a certain company.
S₀ = 23 X = 20
r_c = 0.09 T = 0.5
$\sigma$ ² = 0.15
No dividends are expected.
Use this information to answer questions 1 through 8.
-To construct a riskless hedge,the number of puts per 100 shares purchased is: (Due to differences in rounding your calculations may be slightly different."none of the above" should be selected only if your answer is different by more than 0.01. )

• A)0.7580
• B)0.2420
• C)-0.2480
• D)-0.6628
• E)none of the above

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Definitions:

Operant Conditioning

A learning process where the consequences of a behavior affect the likelihood of that behavior occurring again.

UCR

Unconditioned Response, which is an automatic, natural reaction to a stimulus in classical conditioning theory.

UCS

Unconditioned Stimulus, an aspect of classical conditioning theory, referring to a stimulus that naturally triggers a reflexive or involuntary response without prior learning.

CS

Stands for Conditioned Stimulus in classical conditioning; a neutral stimulus that, after being repeatedly paired with an unconditioned stimulus, becomes able to elicit a conditioned response.