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A Portfolio Consists of 400 Shares of Stock and 200

Question 42

Multiple Choice

A portfolio consists of 400 shares of stock and 200 calls on that stock. If the hedge ratio for the call is 0.6, 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) +$500
C) −$580
D) −$520

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