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A Portfolio Consists of 800 Shares of Stock and 100

Question 79

Multiple Choice

A portfolio consists of 800 shares of stock and 100 calls on that stock. If the hedge ratio for the call is 0.5, what would be the dollar change in the value of the portfolio in response to a $1 decline in the stock price?


A) +$700
B) −$850
C) −$580
D) −$520

Correct Answer:

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