Vega Hedging Is Required Only in Options Portfolios

question 32

True/False

Vega hedging is required only in options portfolios.

Understand the concept of correlation and how it does not imply causation.

Calculate and interpret variability measures such as standard deviation and range.

Understand the importance of sample size and representativeness in generalizing findings to the population.

Recognize misconceptions and biases in understanding statistical information, such as illusory correlation and regression toward the mean.

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Definitions:

Ponzo Illusion

A visual illusion where two horizontal lines of identical length appear to be of different lengths because of converging parallel lines.

Basal Metabolic Rate

The rate at which the body uses energy while at rest to maintain vital functions such as breathing and keeping warm.

Set Point

A theory suggesting that an individual's body weight is maintained around a biologically determined point, with the body regulating metabolism to maintain weight around this point.

Drive

An internal motivational state created by physiological needs that drives an organism to fulfill those needs.