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.

---

Definitions:

Cussing

The act of using swear words or profanity in speech or writing, often used to express strong emotions or for emphasis.

Shaping

A method in behaviorism used to train or teach new behaviors by successively rewarding closer approximations to the desired behavior.

National Zoological Park

A government-operated zoo located in Washington D.C., focused on wildlife conservation, education and providing a home for animals from around the world.

Polar Bear

The polar bear is a large bear species native to the Arctic region, characterized by its white fur, which is used as camouflage in its snow and ice-covered habitat, and primarily feeds on seals.