If an Investor Wanted to Reduce the Risk of a Levered

question 55

Multiple Choice

If an investor wanted to reduce the risk of a levered stock in their portfolio, how could they go about doing so while still retaining shares in the company?

• A) They could sell some of their shares and use the proceeds to buy the firm's bonds.
• B) They could sell some of their bonds and use the proceeds to buy the firm's stock.
• C) They could use borrowed funds to buy more of the firm's stock.
• D) None of the options.

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