Which of the Following Statements Is Correct for an Investor

question 81

Multiple Choice

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

• A) The investor profits when the stock price declines.
• B) Maximum profitability occurs when stock price equals 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:

Agency Meetings

Meetings held by or at the behest of a governmental agency or department to discuss, inform, or decide on policy or regulatory issues.

Public Access

The ability of the general public to reach, use, or enjoy certain resources or facilities.

Fourth Branch Of Government

An informal term for groups or agencies that influence or assist the three official branches of government (executive, legislative, judicial) but are not officially part of them, such as regulatory agencies.

Administrative Agencies

Government bodies responsible for implementing and administering specific legislation.