A Hedge Strategy Known as a Collar Agreement Involves the Simultaneous

question 83

Multiple Choice

A hedge strategy known as a collar agreement involves the simultaneous

• A) Purchase of an in-the money put and purchase of an out-of-the-money call on the same underlying asset with same expiration date and market price.
• B) Sale of an out-of-the money put and sale of an out-of-the-money call on the same underlying asset with same expiration date and market price.
• C) Purchase of an in-the money put and purchase of an in-the-money call on the same underlying asset with same expiration date and market price.
• D) Purchase of an out-of-the money put and sale of an out-of-the-money call on the same underlying asset with same expiration date and market price.
• E) Sale of an in-the money put and purchase of an in-the-money call on the same underlying asset with same expiration date and market price.

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Definitions:

Express Warranty

A guarantee made by a seller that a product will meet certain quality and reliability standards.

Product-Identification Label

Labels on products providing information about the manufacturer, brand, and specific details about the product, often used for tracking and identification purposes.

Description of Goods

A detailed account or specification of the physical and sometimes functional characteristics of goods in a contract for sale.

Implied Warranty

A warranty that the law derives by implication or inference from the nature of the transaction or the relative situation or circumstances of the parties.