A Mixed Strategy

question 6

Multiple Choice

A mixed strategy:

• A) involves two or more pure strategies, each with fixed probabilities.
• B) is a course of action chosen by a player with certainty.
• C) is a player's best response to any strategy that the other player might pick.
• D) refers to the series of moves made by players in a repeated game.
• E) is another term for a player's contingent actions.

Understand the put-call parity and its implications in financial markets.

Recognize factors affecting option pricing such as volatility and time decay.

Learn how to calculate the hedge ratio and its significance in options trading.

Understand the concept of protective puts and how to replicate them with stock and T-bills.