A Collar with a Net Outlay of Approximately Zero Is

question 29

Multiple Choice

A collar with a net outlay of approximately zero is an options strategy that

• A) combines a put and a call to lock in a price range for a security.
• B) uses the gains from sale of a call to purchase a put.
• C) uses the gains from sale of a put to purchase a call.
• D) combines a put and a call to lock in a price range for a security and uses the gains from sale of a call to purchase a put.
• E) combines a put and a call to lock in a price range for a security and uses the gains from sale of a put to purchase a call.

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Definitions:

Business Transactions

Financial activities or operations that involve an exchange of goods, services, or funds between two or more parties.

Equity Securities

Equity securities represent an ownership interest held in a company by individuals or firms in the form of stocks.

Classification

The process of organizing data or items into categories based on their similarities, properties, or characteristics.

Accounting Method

An accounting method is a set of rules that determine how and when income and expenses are recorded in the financial statements.