Question
A stock is currently selling at $100 per share. Over the next year, the stock price will either rise by 10% or fall by 10%.
A stock is currently selling at $100 per share. Over the next year, the stock price will either rise by 10% or fall by 10%. Today, a one-year call option is traded on the stock with an exercise price of 105. What is the hedge ratio of the option today?
A. The hedge ratio is .25
B. The hedge ratio is 4
C. The hedge ratio is -.75
D. Depends on risk free rate, so needs more info
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Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert Hughes
4th Edition
0256147175, 978-0256147179
