The Primary Purpose of a Protective Put Is To

question 35

Multiple Choice

The primary purpose of a protective put is to:

• A) ensure a maximum purchase price in the future.
• B) offset an equivalent call option.
• C) limit the downside risk of asset ownership.
• D) lock in a risk-free rate of return on a financial asset.
• E) increase the upside potential return on an investment.

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Definitions:

Simple Linear Regression Model

A statistical method that models the relationship between a dependent variable and one independent variable by fitting a linear equation to observed data.

Slope

In mathematics, the measure of the steepness, incline, or grade of a straight line, calculated as the ratio of vertical change to horizontal change between two points on the line.

Regression Analysis

A set of statistical processes for estimating the relationships among variables.

Least Squares Line

A line that minimizes the sum of the squares of the vertical distances of the points from the line, used in linear regression analysis.