If an Investor Constructs a Covered Call

question 11

Multiple Choice

If an investor constructs a covered call,

• A)there is no limit to the potential profit
• B)risk is increased
• C)risk is reduced
• D)the term of the position is increased

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Definitions:

Situationism

The theory that behavior is determined more by situations and environmental factors than by personal traits or motivations.

Relative Consistency

The degree to which an individual's behavior remains stable in different contexts over time.

True Interaction

An authentic exchange or engagement between people, which is genuine and not artificial or simulated in any way.

Suppressor Effect

A statistical phenomenon where a variable increases the predictive validity of another variable by controlling for or suppressing irrelevant variance.