Using an Option to Reduce the Risk of a Portfolio

question 32

Multiple Choice

Using an option to reduce the risk of a portfolio is called ________,while using options to bet on the direction of the market or an asset is called ________.

• A)hedging,speculation
• B)hedging,verification
• C)verification,hedging
• D)speculation,hedging
• E)verification,speculation

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Definitions:

Chronological

Pertaining to the arrangement of events or elements in order of their occurrence in time.

Exclude Alternatives

The process of deliberately omitting or avoiding consideration of other options or choices.

Paralanguage

The non-lexical components of communication used to convey meaning, such as tone, pitch, loudness, and rate of speech.

Terminology

The set of technical words or phrases specific to a subject, field, or area of expertise.