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.

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Definitions:

Herman Ebbinghaus

A German psychologist known for his pioneering work on memory and learning processes.

Depth Perception

The ability to perceive the world in three dimensions and judge the distance of objects.

Asymmetric Functioning

Asymmetric Functioning involves non-equal or unbalanced activity or processes within the brain or between different parts of an organism's body or behavior.

Memory

The cognitive function that enables an individual to store, retain, and recall information from past experiences.