Maintaining a delta-neutral portfolio is an example of which of the following
A. Stop-loss strategy
B. Dynamic hedging
C. Hedge and forget strategy
D. Static hedging
B
Delta-neutral hedging is an example of dynamic hedging. The hedge has to be adjusted periodically. (In theory, to maintain a delta-neutral hedge, the hedge must be adjusted continuously.)
You might also like to view...
Suppose ATM costs increased because of additional security required to prevent electronic fraud. Explain how this would affect money demand, aggregate demand, output, and the price level in the short run and the long run.
What will be an ideal response?
The following is divisional information for Falcon Enterprises
East Division West Division Operating income $250,000 $200,000 Net sales 2,225,000 1,575,000 Total assets at Jan. 1 1,500,000 840,000 Total assets at Dec .31 1,200,000 1,000,000 The target rate of return is 12% for the East Division and is 10% for the West Division. Compute residual income for each division. What will be an ideal response
Which of the following is considered to be a collision loss under Part D (coverage for damage to your auto) of the PAP?
A) The covered auto was damaged when the car hit a deer. B) The covered auto is vandalized by a thief after it is stolen. C) The covered auto is damaged when it slid off an icy road and hit a fence. D) The covered auto is damaged by a fire after the engine overheated.
Which of the following statements concerning junk bonds is MOST correct?
A) Junk bonds may also be called low-yielding securities. B) A rational investor will always prefer a AAA-rated bond to a junk bond. C) Junk bonds have higher interest rates than AAA-rated bonds because of the higher risk. D) Junk bonds are priced higher than AAA-rated bonds because junk bonds are more risky.