Which of the Following Is True with Respect to Hedging

question 1

Multiple Choice

Which of the following is true with respect to hedging in the Black-Scholes-Merton model?

• A) One can hedge interest rate risk using rho.
• B) One can hedge volatility rate risk using vega.
• C) One can hedge time decay risk using theta.
• D) One can hedge small price risk using delta.
• E) One can hedge large price risk using delta.

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