You Own Shares of a Stock

question 132

Multiple Choice

You own shares of a stock. You believe the stock price will increase in the future. However, you realize the stock price could decline and want to hedge that risk. Which one of the following option positions should you take to create the desired hedge?

• A) Buy a call.
• B) Sell a call.
• C) Buy a put.
• D) Sell a put.
• E) None of these.

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Definitions:

Gratuity

A voluntary payment made in addition to the required payment, typically given for a service rendered as a token of appreciation.

Brand Awareness

The degree to which customers recognize and understand the characteristics or reputation of a specific brand of products or services.

Marketing Research

The process of gathering, analyzing, and interpreting information about a market, including customers' needs and competitors, to support decision-making.

Sales Promotion

A short-term inducement of value offered to arouse interest in buying a product or service.