A hedge portfolio is established and maintained by constantly adjusting the relative proportions of stock and options,a process referred to as
A)actively managing
B)continuous reconciliation
C)marking to market
D)dynamic trading
E)none of the above

Question

Quizplus · Accepted Answer

The process of constantly adjusting the relative proportions of stock and options in a hedge portfolio is referred to as dynamic trading. This involves actively managing the portfolio to ensure it remains effective in hedging against market risks. Continuous reconciliation and marking to market are related processes but do not accurately describe the specific action of adjusting the portfolio's proportions.

A Hedge Portfolio Is Established and Maintained by Constantly Adjusting