Which of the Following Is a Condition to Perfectly Track

question 4

Multiple Choice

Which of the following is a condition to perfectly track a derivative?s pay-offs with a dynamic strategy?

• A)Markets should be frictionless.
• B)The price of the underlying security must make large jumps.
• C)Trading on the derivative and the underlying security should be restricted.
• D)Arbitraging opportunities must be there.

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Definitions:

Occipital Lobe

The region of the cerebral cortex located at the back of the brain, responsible for processing visual information.

Messages

Units of information communicated from one entity to another, conveying thoughts, feelings, or instructions.

Retina

The light-sensitive layer at the back of the eye that captures visual information and sends it to the brain for interpretation.

Night Vision

The ability to see in low-light conditions, which can vary significantly among different organisms and technologies designed to enhance human nighttime visibility.