If the hedge ratio for a call option is 0.4 and you are short 100 shares of the underlying stock, which of the following actions would result in a risk-free hedge?
A) Buy 400 calls on the stock.
B) Buy 40 calls on the stock.
C) Buy 250 calls on the stock.
D) Sell 400 calls on the stock.
Correct Answer:
Verified
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