Multiple Choice
Portfolio A consists of 400 shares of stock and 400 calls on that stock.Portfolio B consists of 500 shares of stock.The call delta is 0.5.Which portfolio has a higher dollar exposure to a change in stock price?
A) Portfolio B.
B) Portfolio A.
C) The two portfolios have the same exposure.
D) A if the stock price increases and B if it decreases.
E) B if the stock price decreases and A if it increases.
Correct Answer:
Verified
Correct Answer:
Verified
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