A Major Disadvantage of Using Call Options to Hedge a Short

question 68

Multiple Choice

A major disadvantage of using call options to hedge a short position is that:

• A)hedging increases the risk of loss on the short sale.
• B)the option premium and commission reduce profit potential.
• C)the price of the stock may go up.
• D)None of the above

Comprehend the components and implications of Sternberg's theory of successful intelligence.

Learn the role and establishment of norms in psychological testing.

Understand the concept and implications of brain plasticity in intelligence and learning.

Acknowledge the phenomenon of the Flynn effect on IQ scores over time.

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