In hedging,"delta" refers to:
A)the cost involved in acquiring hedging instruments.
B)the degree of risk that a particular hedging instrument addresses.
C)the difference between hedged cash flow and unhedged cash flow.
D)the sensitivity between the hedging instrument and the underlying currency.

Question

Quizplus · Accepted Answer

Delta refers to the sensitivity between the hedging instrument and the underlying currency. It measures the rate of change of the option or derivative price with respect to changes in the underlying asset's price. Delta helps in quantifying the risk involved in a particular hedging instrument.

In Hedging,"delta" Refers To