Which of the following instruments could be used to execute a delta,gamma and vega hedge?
A)a swap
B)an option
C)a futures
D)an FRA
E)none of the above

Question

Quizplus · Accepted Answer

Only an option can be used to execute a delta, gamma, and vega hedge simultaneously, as it is the only instrument allowing for the management of these three risks. Swaps and FRAs can only hedge interest rate risk, while futures only hedge price risk.

Which of the Following Instruments Could Be Used to Execute