What is a hedge portfolio

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Question -

Explain each of the following financial derivatives and their common underlying assets, accompanied by an example of each. Future contract, forward contract, call option and put option.

What is a hedge portfolio? How can you use put options to hedge the stock price fluctuation?

All derivatives are based on the random performance of underlying. How the performance of the underlying asset gives value to the derivative instruments? How the intrinsic values of holding a long call position and a long put position are related to each other? Include graphs in your explanations.

Reference no: EM133155030

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