Question: Exercise 2. (No picking specific numbers) Recall that the hedge ratio for a European call option is given H- Cu-Cd Sp-dSo Characterize the behavior of

Exercise 2. (No picking specific numbers) Recall that the hedge ratio

Exercise 2. (No picking specific numbers) Recall that the hedge ratio for a European call option is given H- Cu-Cd Sp-dSo Characterize the behavior of the hedge ratio in the limit as it gets farther in the money and as it gets farther out of the money, i.e., (Hint: Note that and Cd are really functions of the underlying stock price So)

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