A payoff profile helps:
A) Determine the price of an option contract.
B) Determine whether a forward or a futures contract is needed.
C) Demonstrate the effect of a hedge.
D) Determine the price of a collar.
E) Demonstrate the effects of a swap.

Question

Quizplus · Accepted Answer

A payoff profile is used to illustrate the potential outcomes of a hedge, showing how different scenarios affect the financial position of the hedging strategy.

A Payoff Profile Helps