If You Expect the Price of a Stock to Decrease

question 6

Multiple Choice

If you expect the price of a stock to decrease and its volatility to increase,then the most appropriate strategy to use is a

• A)Long put
• B)Short put
• C)Long Call
• D)Short call

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Definitions:

Personal/Rental Property

Refer to assets owned for personal use or rented out for income, impacting tax treatment and deductions.

Net Income

The total earnings of an individual or business after all taxes and other deductions have been subtracted.

Section 1202

A section of the Internal Revenue Code that provides a tax benefit for small business stockholders by excluding part of the gain realized on the sale or exchange of qualified small business stock held for more than five years.

Qualified Small Business Stock

A special designation for shares in certain small businesses that can offer investors tax advantages under specific conditions.