Which of the Following Is True for an Investor That

question 84

Multiple Choice

Which of the following is true for an investor that owns a share of stock and has purchased a put option on the stock?

• A)The investor profits when the stock decreases in value.
• B)Maximum loss is the price of the option premium.
• C)The investor is protected against upside potential.
• D)Increases in stock value go to the seller of the put.

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Definitions:

Excavation

The process of removing soil, rock, or other materials from a site to form an open hole or cavity.

Purchase Discount

A reduction in price granted by a supplier to a buyer for early payment of an invoice.

Freight-In

The cost associated with transporting goods into a warehouse or to the buyer, often included in the inventory cost.