You Believe the Price of a Stock Is Going to Decline

question 243

Multiple Choice

You believe the price of a stock is going to decline within the next three months. Which one of the following option payoff profiles will reflect a profit if your belief is correct?

• A) Buying a call.
• B) Selling a call.
• C) Buying a put.
• D) Selling a put.
• E) None of these.

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Definitions:

Remember

The act of recalling or bringing back to mind previous experiences, knowledge, or information.

Industrial-Organizational Psychology

The branch of psychology that applies psychological theories and principles to organizations and the workplace to optimize human behavior in work environments.

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Individuals who apply for a position of employment, seeking to fulfill the requirements and responsibilities of a job.

Manufacturing Firm

A business entity that produces goods using raw materials and machinery in a systematic process.