QUESTION 18 Which of the following statements correctly pairs the term with its description? ...

Name: QUESTION 18 Which of the following statements correctly pair
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Which of the following statements correctly pairs the term with its description?

	a.	Implied volatility: the volatility of underlying stock implied by the observed option premium
	b.	Gamma: the rate at which option delta changes with the underlying price
	c.	Time decay: the rate at which option price declines as the option nears its expiration
	d.	All the above

Portfolio P has a delta of zero and a negative gamma. Which of the following statements is correct?

	a.	Gamma measures the change in the dollar value in portfolio value per $1 increase in the stock price.
	b.	To make the portfolio gamma neutral, the trader needs to buy additional shares of stock
	c.	Gamma means that the change in the rate of gain (loss) in portfolio value as stock price gets higher.
	d.	The portfolio consists of a long stock position and a long put position, because gamma is negative.

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