Which of the Following Methods Might Be Used to Protect

question 11

Multiple Choice

Which of the following methods might be used to protect a profit on a diversified portfolio of stocks?

• A) Buy S&P 500 Index put options.
• B) Buy put options on a S & P 500 based ETF.
• C) Write S&P 500 Index put options.
• D) Either A or B, but not C.

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Definitions:

Return On Equity Ratio

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how well a company uses investments to generate earnings growth.

Financial Statements

Official records that outline the financial activities and condition of a business, individual, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Common Shares

Common shares represent ownership in a company and provide shareholders with voting rights and dividends, subject to corporate profitability and decision of the board.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations based on its earnings before interest and taxes (EBIT).