For Gordon to Maximize His Potential Return from a Bearish

question 18

Multiple Choice

For Gordon to maximize his potential return from a bearish view on a stock, he should:

• A) buy calls.
• B) write calls.
• C) buy puts.
• D) write puts.

---

Definitions:

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors, underpinning the basis for trade.

World Price

The price of a good or service on the international market, shaped by the global forces of supply and demand.

Domestic Price

The cost of products or services in a country, affected by domestic demand and supply factors.

Tariff

A tax or duty to be paid on a particular class of imports or exports, often used as a tool for trade policy.