What Is the Reason for Executing a Gamma Hedge

question 59

Multiple Choice

What is the reason for executing a gamma hedge?

• A)the volatility can change
• B)the stock price can make a large move
• C)the stock price moves are too small for a delta hedge to work
• D)there is no true risk-free rate
• E)none of the above

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Definitions:

ANOVA

A statistical technique that assesses potential differences in a scale-level dependent variable by a nominal-level variable having two or more categories.

Linear Growth Model

A statistical model used to estimate and interpret changes over time, assuming that the change is constant and follows a straight line.

Nonparametric Statistics

Statistical methods that do not assume a specific distribution of the data, often used when data doesn’t meet the assumptions required for parametric testing.

Process Variable Changes

Alterations in variables that are measured, manipulated, or controlled in a study, focusing on how these changes affect outcomes within the process being studied.