What is the hedge ratio, What is the hedge ratio? What does

What is the hedge ratio

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Reference no: EM133616853

Questions

1. Suppose the stock price today is $50, in year time the stock price goes up to $77.65 and goes down to $48.47, dollar rate of return in one year is 1.0513.

Set up a perfect hedge and compute the put option's value using the synthetic approach. Let the put have the same strike price K =$65.

2. What is the hedge ratio? What does it signify?

Reference no: EM133616853

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