You Believe the Price of a Stock Is Going to Decline

question 36

Multiple Choice

You believe the price of a stock is going to decline within the next three months. Which one of the following option payoff profiles will reflect a profit if your belief is correct?

• A)buying a call
• B)selling a call
• C)buying a put
• D)selling a put
• E)none of the above

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Definitions:

Psychosocial

Relating to the interrelation of social factors and individual thought and behavior.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Operant Conditioning

A learning process in psychology where behaviors are influenced by the consequences that follow them, such as rewards or punishments.

Social Order

The set of rules, norms, and structures that govern societies, enabling individuals to live together in harmony and security.