Which One of the Following Is the Primary Purpose of a Protective

question 16

Multiple Choice

Which one of the following is the primary purpose of a protective put?

• A)profit from an expected future increase in the underlying stock's value
• B)guarantee a higher return than is possible from just owning the underlying security
• C)offset the risk associated with a decrease in the value of the underlying asset
• D)receipt of the option premium
• E)increase in potential rate of return due to increase in risk