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Hedge Ratio
For options, ratio between the change in an option's theoretical value and the change in price of the underlying stock at a given point in time.
For convertibles, percentage of a convertible bond representing the number of underlying common shares sold against the shares into which bonds are convertible.
If a preferred is convertible into 2000 common shares, a 75% hedge ratio would be short (long) 1500 common for every 1000 preferred long (short).
Submitted by: admin
Added: Sat May 20 2006
