The Single Period Binomial Hedge Ratio for Stock Call Options

question 21

True/False

The single period binomial hedge ratio for stock call options could be computed by equating the two future cash flows -- from a portfolio of long h shares of stock and short one call -- and solve for the number of underlying stocks to hold.

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Definitions:

Defense Mechanisms

Defense mechanisms that operate below the level of consciousness to fend off anxiety linked to unacceptable emotions or ideas.

Trait Theorists

Psychologists who study personality, focusing on identifying and measuring individual traits or characteristics.

Cluster

A collection or grouping of similar items, individuals, or events closely located or occurring together.

Dimension

A measurable extent of some kind, such as length, width, depth, or height, or an aspect or feature of a situation.