Which One of the Following Actions Would Be the Most

question 69

Multiple Choice

Which one of the following actions would be the most appropriate hedge to a short sale of common stock?

• A) sale of a call
• B) purchase of a call
• C) sale of a put
• D) purchase of a put

---

Definitions:

Underlying Conditions

Fundamental or root circumstances or factors that directly impact outcomes, often requiring analysis to fully understand their effects.

Financial Statement

Reports that provide an overview of a company's financial condition, performance, and cash flow, including the balance sheet, income statement, and cash flow statement.

Statement of Financial Position

A financial statement that displays the assets, liabilities, and equity of a company at a specific point in time, also known as the balance sheet.

Order of Liquidity

The sequence in which assets are expected to be converted into cash, starting with the most liquid assets.