Which of the Below Statements Is TRUE

question 23

Multiple Choice

Which of the below statements is TRUE?

• A) Stock options cannot be used to take advantage of the anticipated price movement of individual stocks.
• B) An investor can protect against a decline in the price of a stock in her portfolio by buying a call option on that stock.
• C) By taking an appropriate position in a suitable stock index option, an institutional investor can create a protective put for part of the diversified portfolio.
• D) A protective put buying strategy allows an investor to protect against a decline in the price of a stock in her portfolio by buying a put option on that stock.

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Definitions:

Liable for Infringement

The state of being legally responsible for violating a right or law, typically referring to intellectual property rights.

Newspaper

A regularly published print or digital publication containing news, information, and advertisements relevant to a broad audience.

Photograph

An image created by capturing light on a light-sensitive surface, either digitally or on film.

Patent

The exclusive right granted to the inventor of something new and different to produce the invention for a period of 20 years in return for the disclosure of the invention to the public.