Among several other hedging strategies, we have examined delta hedging.
a) How would you characterize delta hedging?
b) Next, explain how the concept is used in the option pricing models we considered in our subject.
c) Finally, illustrate how delta hedging relates to the concept of risk neutral valuation.
Answers
Delta hedging is a risk management strategy in options trading. b) In option pricing models, delta hedging involves creating a delta-neutral portfolio. c) Delta hedging aligns with the concept of risk-neutral valuation by replicating risk-neutral probabilities in the portfolio.
a) Delta hedging is a risk management strategy commonly used in options trading. It involves establishing and maintaining a portfolio of assets that offsets the potential changes in the value of an option position due to fluctuations in the underlying asset's price. The delta of an option represents the sensitivity of the option's price to changes in the underlying asset's price. By taking offsetting positions in the underlying asset and the option, delta hedging aims to reduce or eliminate the risk associated with price movements.
b) In option pricing models such as the Black-Scholes model, delta plays a crucial role. Delta represents the rate of change in the option price relative to changes in the underlying asset price. It indicates the probability of the option expiring in-the-money (positive delta) or out-of-the-money (negative delta).
To illustrate how delta hedging is used in option pricing models, consider a scenario where an investor holds a long call option position. The delta of the call option will be positive, indicating that the option price will increase as the underlying asset price rises. To hedge against potential losses if the underlying asset price falls, the investor would take a short position in the underlying asset. This creates a delta-neutral portfolio where any changes in the value of the option position are offset by changes in the value of the underlying asset position.
c) Delta hedging is closely related to the concept of risk-neutral valuation. In the risk-neutral framework, it is assumed that the market is risk-neutral, meaning that investors are indifferent to taking on risk. Risk-neutral valuation allows for simplified pricing of derivatives, including options, by considering the expected value of future cash flows discounted at the risk-free rate.
Delta hedging can be seen as a practical implementation of risk-neutral valuation. By maintaining a delta-neutral portfolio, investors effectively eliminate the directional risk associated with changes in the underlying asset's price. This aligns with the risk-neutral assumption that investors are indifferent to the market's movements.
In the risk-neutral framework, the delta of an option represents the probability of the option expiring in-the-money. By delta hedging, investors are replicating the risk-neutral probabilities in their portfolio, ensuring that the expected value of the hedged position aligns with the risk-neutral valuation approach. Delta hedging allows investors to manage their exposure to market movements while aligning their portfolio with the assumptions of risk-neutral pricing.
Overall, delta hedging is a practical strategy used in option trading to manage risk, and it aligns with the concept of risk-neutral valuation by maintaining a delta-neutral portfolio and replicating the risk-neutral probabilities in the pricing of options.
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Related Questions
When Scrooge hears the dinner bell from the poorhouse, how does he react?
A.He looks up as if he has heard it but never focuses on it.
B.He ignores it completely.
C.He jumps up and rushes over to help serve food.
D.He agrees to donate money to the visitor.
Answers
Answer:
the answer is A
Explanation:
what was the purpose and the result of these adam mccarthyhearings
Answers
In response to the incident at the US Capitol on January 6, 2021, the Adam McCarthy Hearings were held in March of 2021.
The hearings were a part of the ongoing investigations into the circumstances leading up to and occurring at the riot, and Adam McCarthy served as the chairman of the oversight, management, and reform subcommittee.
The hearings were held in order to provide details about how the disturbance was planned and carried out. In order to learn more about the reasons for the attack and the security flaws that made it possible, McCarthy questioned witnesses, law enforcement personnel, and other specialists.
These hearings were but a small component of a bigger attempt to comprehend the security flaws that let the attack to occur and the potential driving motives behind the assailants. The results of the hearings ultimately guided the education and prosecution of those responsible for the Capitol attack.
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The most common type of text that needs to be read
Answers
Answer:
Linear text.
Explanation:
Linear text is the most common type of text that needs to be read from beginning to the end.
In linear text, the arrangement of words is very important and plays a significant role in the meaning and message conveyed by the writer of the literary work. The words in a linear text are arranged either stylistically or grammatically.
Read the following two sentences. Millions of people had come from all corners of the country, far and near, to meet on the National Mall in Washington, D.C., and to have their voices heard. Padma had never seen so many individuals congregate in one place. Use context clues to find the definition for the word congregate as it is used in these sentences. to assemble or come together to talk to Congress to travel from near by to come from far away Giving 30 Pointsssssss
Answers
Answer:
A: to assemble or to come together
Explanation:
Which of the following best describes a person who is meager in appearance?
The person is thin and gaunt.
The person is broad and heavy.
The person is inuscular and strong.
The person is slender and graceful.
Answers
Answer:
b
Explanation:
the person is broad and heavy
The following best describes a person who is meager in appearance is
the person is broad and heavy.
What is the role of appearance in society?Appearance connects to the way according to that face seeminly or his participation in a general event.
Appearance always recreates a vital role in society. someone are ruled by their gender and appearance.
Thus, option "B" is correct.
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hey guys please help me with this reported speech...
"Children ,you are not allowed to talk during the class,"the teacher warned.
Answers
The teacher warned the children not to talk during class.
Hope this helps
:)
To uncovered the relationship we could use OLS. For that approach to generate unbiased estimates, we need strict exogeneity to hold. That often is not the case. An alternative estimator is IV. What are assumptions we need for IV to produce unbiased/consistent estimates?
Group of answer choices
Relevance (cov(z,x)!=0)
No serial correlation
Guassian (Normal) Standard Errors
Homoskedasticity
Exogeneity (E(u|z)=0)
Answers
To produce unbiased and consistent estimates, the IV estimator relies on assumptions such as exogeneity, relevance, no serial correlation, homoskedasticity, and potentially Gaussian standard errors.
The instrumental variable (IV) estimator is an alternative approach to Ordinary Least Squares (OLS) when strict exogeneity does not hold. To produce unbiased and consistent estimates, the IV estimator relies on a set of assumptions.
One crucial assumption is exogeneity, which states that the error term (u) is uncorrelated with the instrumental variable (z) after controlling for the endogenous variable (x). Mathematically, this assumption can be written as E(u|z) = 0.
Exogeneity is essential because it ensures that the instrumental variable affects the endogenous variable only through its relationship with the endogenous variable and not through any other channels.
By satisfying this assumption, the IV estimator isolates the variation in the endogenous variable that is truly caused by the instrumental variable, allowing for unbiased estimates of the causal effect.
In addition to exogeneity, other assumptions required for IV estimation include relevance (covariance between the instrumental variable and the endogenous variable is nonzero), no serial correlation (absence of correlation among the error terms), homoskedasticity (constant error variance), and potentially Gaussian (normal) standard errors for hypothesis testing and confidence intervals.
These assumptions collectively establish the conditions necessary for the IV estimator to generate valid and reliable estimates of causal effects in the presence of endogeneity.
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what contrasts are suggested betwen the speaker in the second peom and a his horse and the owner of the woods
Answers
The speaker is mesmerized by the wonder of the place. He forgets his purpose and dwells deep into Nature's beauty. Fully hypnotized, the speaker who stops for a moment, fails to come to his duties.
On the opposite hand, the horse appears to be accountable and additional duty-conscious. In Robert Frost's verse form “Stopping by Woods on a Snowy Evening”, the persona deals with the inner struggle to settle between his instinct and his rational thought that are seen severally through the distinction of the narrator's want to remain by the woods longer and therefore the guarantees he needs to keep throughout the verse form.
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tomas has a writing assignment. his directions were to take the main ideas and write a short paper in his own words about what he found in his research. based on this description, tomas will responses not need to include citations from his research. not need to include citations from his research. summarize his research. summarize his research. paraphrase his research. paraphrase his research. directly quote his sources.
Answers
No, Tomas will not need to include citations from his research. He should be able to summarize, paraphrase, and directly quote his sources in order to create a short paper in his own words about his research.
Based on the description provided in the question, Tomas will need to summarize his research and paraphrase it in his own words. He will not need to include citations from his research.
It is important to note that while Tomas does not need to include citations from his research, he still needs to accurately summarize and paraphrase the information he found to avoid plagiarism.
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Help! I will make the best answer brainliest!
Type in name of the narrative leads with the descriptions.
____ uses action verbs to make the beginning of the story exciting
____ begins with the thoughts of the main character
____ begins with a dialogue
Answers
Answer: Talking Lead begins with a dialogue
Sound Effect Lead begins with the thoughts of the main character
Action lead uses action verbs to make the beginning of the story exciting
Metaphor for two people that are opposites
Answers
Read the sentence, and decide whether the underlined portion contains a mistake.
The attorney planned to settle the case out of court, which, to everyone involved in the tragedy, was a relief.
A. which was relieving to the tragedy involved.
B. which made the tragedy a relief to everyone.
C. which has made a feeling of relief come over everyone involved in the tragedy.
D. which was a relief to everyone involved in the tragedy.
E. No improvement or correction is required.
Answers
Answer:
D
Explanation:
its similar to theoriginal but its easier to understand and read
What is a buried verb? Group of answer choices When writers use needlessly complex or hyperbolic terms in place of simpler words and phrases. When writers start sentences or clauses with the word "this," "that," "these," or "those," unaccompanied by a following noun. When writers use the same grammatical form for all the items in a list or series. When writers transform a verb into a noun (typically by adding an "-ion" or "-ment" suffix).
Answers
Answer:
A buried verb is a type of sentence construction in which the verb (the action word) is hidden or buried inside a noun phrase, making the sentence less clear and concise. It often results in a sentence that is longer and more difficult to understand. For example, instead of saying "He ate a sandwich," a buried verb construction might be "A sandwich was consumed by him."
Explanation:
Fernando and Barnardo are on edge because their kingdom is at war; however, they're mainly startled because...
O they mistook each other for the enemy
O they saw a ghost
O Young Hamlet yelled at them
O a cat jumped out of the bushes
Answers
Fernando and Barnardo were on edge because their kingdom was at war however, they're mainly startled because they mistook each other for the enemy.
The correct option is A.
The tension and fear of the unknown had them on edge, ready to respond to any sign of danger. However, what startled them was not the war itself, but something much more unexpected. They mistook each other for the enemy, believing the other to be a soldier of the opposing army.
In the midst of the darkness, their own uniforms and features were indistinguishable, and the realization of their mistake only heightened their fear. They were relieved to find out it was just each other, and that the enemy was not upon them.
The correct option is A.
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Can someone finish this poem about Steph Curry the NBA Player
Number 30
In the Golden State Warriors
Answers
Answer:
Explanation:
Steph Curry is the best because he shoots amazing
How is this excerpt an example of irony County Attorney?
Answers
Contrary to what you might anticipate in a circumstance like this, the County Attorney's jocular and light-hearted demeanor is refreshing.
The phrase that best sums up the aforementioned passage are: It is situational irony because, without realizing it, the County Attorney really gave Mrs. Peters a warning that is pertinent.
"Trifles," a book about women's rights and expectations that was written in the early 1900s, addresses these issues. Due to their presumptions, the men are still unaware of the reality, which is an ironic twist considering that the audience is aware that the women have found the key to the murder mystery.
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So far, what seems most interesting to you about being a lighting designer or working with lighting on a play, TV Show, or Movie?
Answers
Answer:
What seems most interesting to me is how certain colors of light can go so well with certain moods. Like for instance, the color blue may be used to indicate sadness while the color red might indicate love or anger. The color of lighting can also help to bring about certain aspects of a character’s design and attitude when seen on stage.
Explanation:
choose the adverbial phrase in the following sentence: jenny tried to talk to peter underneath the water.
Answers
We can see here that the adverbial phrase in the sentence is: underneath the water.
What is an adverbial phrase?An adverbial phrase is actually known to be a phrase which usually acts an adverb in a sentence. Adverbial phrases usually consist of an adverb which can stand alone or can be modified by the presence of other words.
We see here adverbial phrases are different from adverbial clauses.
We see here that the adverbial phrase "underneath the water" is actually telling the audience the manner Jenny talked to Peter.
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Please help me.
40 points are in the balance, as well as a Brailnliest.
In the form of a persuasive speech, respond to the following prompt:
Defend or refute Darwin’s statement: "Of all the differences between man and the lower animal, man’s sense of moral conscience is by far the most important. " Include an analysis of moral choices or conflicts by two characters in this unit and one example of the same from history or personal experience to support your position
Answers
A persuasive speech is any speech in which the speaker wants to persuade the audience to agree with their viewpoint or do the desired action. The speaker directs the audience's ideas and behaviors with both words and pictures.
What are the three categories of convincing speech?In the context of beliefs and attitudes, three categories of persuasive speeches are most frequently employed. These are declarations of fact, worth, and policy.
What form does persuasion take?When referring to the three types of persuasion, ethos, pathos, and logos are frequently used. You probably already have a firm grasp of these persuasive techniques, but it will be helpful when you write argumentative essays to be aware of how to persuade your readers in the most effective way.
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I say TRUE if the statement is correct and FALSE if the statement is incorrect
1. "Blowing at 50 miles per hour, the roof was ripped off". The statement is correct.
2. A topic sentence can be put in the beginning and the end of the paragraph.
3. A sentence will be clear if the writer omits words needed for clarity and accuracy.
4. They bought a kitten for my brother they call shadow. The statement contains dangling modifier.
5. Two independent clauses must be put together with a separating punctuation; otherwise the sentence will be fused sentence.
6. Verbs in the active voice create more emphasis than verbs in the passive voice.
7. Developing a paragraph without the use of a topic sentence can be effortless.
8. A sentence is a dependent unit made up of a word or group of words related as to convey a complete thought.
9. A compound sentence has at least two independent clauses that have related ideas.
10. Dangling modifiers occur when the subject in the introductory phrase is not stated.
Answers
FALSE. The statement is incorrect. It should be rephrased as "Blowing at 50 miles per hour, the wind ripped off the roof."
How to explain the informationTRUE. A topic sentence can be placed at the beginning or the end of a paragraph.
FALSE. A sentence should not omit words needed for clarity and accuracy. It should be clear and complete.
TRUE. The statement is correct. It contains a dangling modifier. It should be rephrased as "They bought a kitten they call Shadow for my brother."
TRUE. Two independent clauses should be separated by punctuation such as a comma and a coordinating conjunction or a semicolon. Otherwise, it may result in a fused sentence, also known as a run-on sentence.
TRUE. Verbs in the active voice generally create more emphasis than verbs in the passive voice.
FALSE. Developing a paragraph without the use of a topic sentence can be challenging or disorganized, but not effortless.
TRUE. A sentence is a independent unit of thought composed of a group of words that convey a complete idea.
TRUE. A compound sentence consists of at least two independent clauses that have related ideas and are typically joined by a coordinating conjunction or a semicolon.
TRUE. Dangling modifiers occur when the subject in the introductory phrase is not clearly stated or does not match the subject of the main clause.
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Read the passage from \Animal Farm.
On the third Sunday after Snowball's expulsion, the animals were somewhat surprised to hear Napoleon announce that the windmill was to be built after all. He did not give any reason for having changed his mind, but merely warned the animals that this extra task would mean very hard work, it might even be necessary to reduce their rations.
What is the central idea of this passage?
Answers
Answer:
The main idea is that napoleon changed his mind about the windmill and asked the animals to build it, stating that hard work was ahead.
The central idea is that napoleon changed his mind about the windmill and asked the animals to build it, stating that hard work was ahead.
What is an idea?In common usage and in philosophy, ideas are the results of thought.Also in philosophy, ideas can also be mental representational images of some object. Many philosophers have considered ideas to be a fundamental ontological category of being.
The capacity to create and understand the meaning of ideas is considered to be an essential and defining feature of human beings. In a popular sense, an idea arises in a reflexive, spontaneous manner, even without thinking or serious reflection, for example, when we talk about the idea of a person or a place. A new or an original idea can often lead to innovation.
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isaiah recently discovered a sunken ship during a diving expedition off the coast of florida. he wants his speech about the expedition to paint a picture in the minds of his audience. which form of informational speech would enable isaiah to achieve his goal?
Answers
One of the best forms of informational speech that can help Isaiah to achieve his goal of painting a picture in the minds of his audience is Descriptive Speech. A Descriptive speech is an informative speech where the speaker describes a particular person, place, thing, idea, or event in detail by appealing to the senses of the audience.
This kind of speech aims to enable the listeners to create an image in their minds about the topic. A Descriptive Speech offers a great way of educating and enlightening the listeners on the topic of discussion by allowing them to develop a deeper understanding of the subject. Below are some tips to consider when preparing a Descriptive Speech: Select a topic that interests the audience. Choose a topic that you have a passion for to ensure you remain passionate while presenting it to the audience. Research on the topic. Research extensively on the topic of your speech to ensure you have enough information to describe it in detail.
Create a list of adjectives to describe your topic. Use adjectives to create mental images in the minds of the listeners. Descriptive words like colors, smells, feelings, textures, and sounds are excellent in creating vivid images that the listeners can visualize. Use the five senses in your description. Incorporate all five senses, i.e., smell, touch, taste, sound, and sight to create an accurate and detailed description of the topic. In conclusion, Descriptive Speech is the best form of speech that can help Isaiah to achieve his goal of painting a picture in the minds of his audience. This speech will help him describe the sunken ship he discovered in detail by appealing to the audience's senses.
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1. The details in paragraph 2 support the key
idea that Johnson -
A. did not enjoy speaking to Congress
B. became president after Kennedy's death
C. spoke to Americans on national television
D. fought for civil rights legislation
Answers
The details in paragraph 2, such as "the Civil Rights Act of 1964 and the Voting Rights Act of 1965," suggest that Johnson fought for civil rights legislation.
The laws and regulations made with the aim of protecting the fundamental freedoms and rights of everyone regardless of colour, gender, religion or national origin are called civil rights laws and regulations. The Civil Rights Movement in the United States, which attempted to eradicate segregation and discrimination against African Americans and other minority groups, placed significant emphasis on civil rights legislation.
Therefore, the correct option is D.
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Write an essay describing how to build your career path in computer science or information technology
Answers
Computer science and information technology essay are two highly promising fields to build a career path in. The ever-increasing technological advancements and digitalization of modern society have led to the emergence of a wide range of job opportunities in these fields.
Technology is constantly evolving, and it is important to keep up with the latest advancements and trends in the field. Attend workshops, take online courses, and read industry publications to stay updated. This will help you build new skills and make you more marketable to potential employers.
In conclusion, building a career path in computer science or information technology requires passion, dedication, and continuous learning. By following these steps, you can develop relevant skills, gain practical experience, build a strong network, and stay updated with the latest trends in the field. With hard work and determination, you can build a successful career in this exciting and dynamic industry.
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put in order only /in/the village/it / restaurant/is / the
Answers
5) According to the passage, Key and his friends watched the British attack on Fort McHenry from their boat
in Baltimore Harbor. Based on this information, you can tell that they
A) planned to write "The Star Spangled Banner" the whole time.
B) were concerned about the fate of Baltimore and Fort McHenry,
C) tried to warn soldiers at Fort McHenry of the upcoming attack.
D) played an important role in the American victory over Great Britain.
Please be fast
Answers
Answer:D
Explanation:
Bc American and British are completely English until they get victor
Select the correct answer.
How does the author connect the ideas about the parks in America throughout the passage?
OA. by comparing and contrasting their characteristics
OB. by providing information on how to visit them
O c. by explaining why each one is unique
O D. by listing them in order of importance
Answers
By comparing and contrasting their characteristics is the way the author connect the ideas about the parks in America throughout the passage.
What is contrasting?
When comparing two things, one is clearly significantly different from the other. He has always made public pronouncements that are noticeably different from those of his son.
Therefore,
Select the correct answer.
How does the author connect the ideas about the parks in America throughout the passage?
OA. by comparing and contrasting their characteristics
OB. by providing information on how to visit them
O c. by explaining why each one is unique
O D. by listing them in order of importance
By comparing and contrasting their characteristics is the way the author connect the ideas about the parks in America throughout the passage.
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Answer: C. by explaining why each one is unique
Explanation: took the quiz and got this answer correct.
plz halp muh im SUPER tired and cant do this myself
Answers
to truly love someone, you need to have trust, respect and devotion. if you cannot trust someone with your secrets, it even trust that they will love you back, they do not deserve your love. they also need your respect and you need to respect them. respecting boundaries is a big deal. if you feel like someone puts you down or disrespects you, that is not true love. devotion is also important. if you want to love someone and have them love you back, you need to give them your everything and full attention.
Analyze why looking after your health is included in self-responsibility.
Answers
Answer:
Health responsibility means that individuals fulfill their duties to maintain their physical, mental, and social well-being.This means that they should eat a healthy diet and avoid inactivity. They should not put their health at risk, for example, through smoking or consuming excess alcohol.
The self-responsibility includes right from diet maintenance, exercise, yoga, meditation. People may prefer the hectic schedule over the physical exercise. But they are under certain health risks without yoga or exercise or meditation.
Self-care basically depends on how we watch over our physical and mental health.
Hope it helps! please give me brainliest!A high school teacher tells his class that he thinks boys tend to be less anxious and, thus, give better speeches than girls. consequently, the girls in his class become apprehensive when preparing and giving speeches in his class. the girls are reacting to:_________
Answers
A high school teacher tells his class that he thinks boys tend to be less anxious and, thus, give better speeches than girls. consequently, the girls in his class become apprehensive, the girls are reacting to: teacher's prejudiced and sexist view of gender roles.
By stating that boys tend to be less anxious and give better speeches than girls, the teacher has created an environment in which the girls feel inadequate and anxious when it comes to preparing and giving speeches. This feeling of inadequacy is a result of the teacher's implicit and explicit messages about gender roles.
The teacher's comments are not only hurtful and damaging to the self-esteem of the girls in his class, but also reflect an outdated and misguided view of gender. The message the teacher is sending is that girls are not capable of giving as good of speeches as boys, which is not supported by any research.
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