Question: Please explain step by step Question 10. The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise
Please explain step by step
Question 10. The current price of a non-dividend-paying stock is $40. Over the next year it is expected to rise to $42 or fall to $37. An investor has a short position in call options with a strike price of $41. Which of the following is necessary to hedge the position? A. Buy 0.2 shares for each option purchased B. Sell 0.2 shares for each option purchased C. Buy 0.8 shares for each option purchased D. Sell 0.8 shares for each option purchased
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