Buying a Put Option Truncated the Downside Losses on the Bond

question 69

True/False

Buying a put option truncated the downside losses on the bond following interest rate rises to some maximum amount and scales down the upside profits by the cost of bond price risk insurance, leaving some positive upside profit potential.

---

Definitions:

Fermentation

An anaerobic process by which ATP is produced by a series of redox reactions in which organic compounds serve both as electron donors and terminal electron acceptors.

NADH

Nicotinamide adenine dinucleotide (reduced form) is a coenzyme involved in redox reactions, carrying electrons from one reaction to another in cellular metabolism.

Organic Molecule

A compound mainly made of carbon atoms, often containing hydrogen, oxygen, nitrogen, sulfur, and/or phosphorus, which is typically associated with living organisms.

Aerobic Pathways

Metabolic processes that require oxygen to produce energy, including the Krebs cycle and oxidative phosphorylation.