Which One of the Following Statements Is Correct for an Investor

question 46

Multiple Choice

Which one of the following statements is correct for an investor who has purchased portfolio insurance by owning a stock and buying a put option on that stock?

• A) The investor profits when the stock price declines.
• B) Maximum profitability occurs when the stock price equals the strike price.
• C) Value per share can decline no further than the strike price less the value of the option premium.
• D)The option will certainly be exercised.

Understand the basic principles and processes of classical conditioning including acquisition, extinction, spontaneous recovery, and generalization.

Comprehend the principles of operant conditioning including reinforcement schedules, punishment, and shaping.

Identify examples of conditioned and unconditioned responses and stimuli within classical conditioning.

Understand the concept of learning as a change in behavior resulting from experience.

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Definitions:

Straight-Line

A method of calculating depreciation of an asset, which allocates an equal amount of depreciation to each year of the asset's useful life.

Sum-Of-Years' Digits

A depreciation method that accelerates the expense recognition, using a decreasing fraction of years remaining over the sum of the years' digits.

Double-Declining Balance

A method of accelerated depreciation which doubles the normal depreciation rate, reducing the asset's book value more quickly in its early years.

Salvage Value

The estimated residual value of an asset at the end of its useful life.