A Protective Put Is a Costless Way of Eliminating the Downside

question 27

True/False

A protective put is a costless way of eliminating the downside risk if holding stock.

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Definitions:

Implied Warranties

Legal assurances that are not explicitly stated but are assumed in transactions, such as the assumption that goods are of merchantable quality.

Reasonable Inspection

A thorough yet fair examination or check, often used in contracts or legal contexts to ensure compliance with standards.

Warranty Action

Legal action taken to enforce the terms of a warranty, which is a guarantee provided by a seller to a buyer regarding the condition of a product.

Negligence

The failure to exercise the care that a reasonably prudent person would exercise in similar circumstances, leading to unintended harm or damage.