7.

The delta-hedge ratio essential in both the Black-Scholes and Binomial model because: (Select all that apply) a. If it is over 1 it indicates that the option is overpriced, below 1 underpriced and at 1 fairly priced b. It shows you how to make money c. It guarantees that markets are complete so long as it has a positive value d. It identifies the derivative of a function of a stochastic process so that the function value can be solved e. It can eliminate risk and therefore identify the appropriate (risk-free) discount rate to estimate the price of the option