What is an option hedge ratio? How does the hedge ratio for a call differ from that of a put (or are the two equivalent)? Explain. 

 

Discuss the differences between the capital market line and the security market line. 

 

Discuss the similarities and the differences between the CAPM and the APT with regard to the following factors: capital market equilibrium, assumptions about risk aversion, risk-return dominance, and the number of investors required to restore equilibrium. 

Answer rating: 100% (QA)

1 An options hedge ratio is used to determine the number of options contracts required to hedge an underlying assets risk The hedge ratio for a call a... View the full answer