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:

IR Absorptions

Refers to the specific wavelengths at which infrared (IR) radiation is absorbed by a molecule, providing insights into the types of bonds and functional groups present.

Compound Name

The systematic or common naming of chemical compounds based on their structure and the nomenclature rules of chemistry.

Spin-Spin Splitting

A phenomenon in NMR spectroscopy where a nucleus's magnetic field is split by the magnetic fields of neighboring nuclei.

Chemical Shift

A term used in nuclear magnetic resonance (NMR) spectroscopy to describe the change in magnetic resonance frequency of a nucleus due to its chemical environment.