Which of the Following Is Not a Reason for Investors

question 47

Multiple Choice

Which of the following is not a reason for investors to trade options?

• A) Options eliminate leverage.
• B) Options require a smaller investment than stock investments.
• C) Options allow investors to trade on overall market movements.
• D) Options can reduce risk.

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Definitions:

Conversion Value

The financial worth of converting a convertible security, like a bond, into a set number of shares of the issuing company.

U.S. Treasury Note

A marketable U.S. government debt security with a fixed interest rate and a maturity between one and ten years.

Accrued Interest

The interest that has accumulated on a bond or other fixed-income security since the last interest payment was made.

Settlement

The process of exchanging payment for financial transactions, including securities, at their completion.