While Share- Index Options Can Be Used to Play the Market

question 58

True/False

While share- index options can be used to play the market as a whole, they are also effective in protecting equity portfolios against falling markets.

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Definitions:

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee but does not fully control it.

Effective Income Tax Rate

The mean rate at which a person or company is taxed, determined by dividing the total amount of tax owed by the taxable income.

Net Income

The amount of profit left over after all operating expenses, taxes, and interest payments are deducted from total revenue. It is a key indicator of a company's profitability.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.