Which One of the Following Statements Is Correct for an Investor

question 57

Multiple Choice

Which one of the following statements is correct for an investor who has purchased portfolio insurance by owning a stock and buying a put option on that stock?

• A) The investor profits when the stock price declines.
• B) Maximum profitability occurs when the stock price equals the exercise price.
• C) The value of the position can decline no further than the option's exercise price.
• D) The option will certainly be exercised.

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Definitions:

Decision Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Employee Selection

The process by which companies evaluate and choose from a group of applicants the individuals best suited for a particular job or role.

Markov Analysis

A method for tracking the pattern of employee movements through various jobs.

9-box Grid

A talent management tool used for assessing employees' performance and potential, typically visualizing their placement within a matrix.