The delta$-$hedge ratio essential in both the Black$-$Scholes and Binomial model because:

$($Select all that apply$)$

Question $2$Answer

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 can eliminate risk and therefore identify the appropriate $($risk$-$free$)$ discount rate to estimate the price of the option

d$.$

It identifies the derivative of a function of a stochastic process so that the function value can be solved

e$.$

It guarantees that markets are complete so long as it has a positive value