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:

Intelligence Agency

A government body responsible for the collection, analysis, and exploitation of information and intelligence to support national security and foreign policy objectives.

National Security State

A concept referring to a government or nation that prioritizes its perceived security needs, often leading to significant military and surveillance capabilities.

Military-Industrial Complex

Refers to the close relationship between a country's armed forces, its government, and industries producing military materials, potentially influencing policy and spending.

Preventive War

A conflict initiated to prevent another party from acquiring a capability for attacking. The action is taken despite the absence of an immediate threat.