A Collar with a Net Outlay of Approximately Zero Is

question 39

Multiple Choice

A collar with a net outlay of approximately zero is an options strategy that

• A)combines a put and a call to lock in a price range for a security.
• B)uses the gains from sale of a call to purchase a put.
• C)uses the gains from sale of a put to purchase a call.
• D)both A and B.
• E)both A and C.

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Definitions:

Accumulated Cash

The total amount of cash that a company has generated and saved over its history, minus any cash payments or dividends made to shareholders.

Leased Asset

An asset that is rented under a contract where the lessee (user) has the right to use the asset in exchange for regular payments to the lessor (owner).

Long-Term Asset

Assets that are expected to provide economic benefits over a period longer than one year, such as buildings, machinery, and land.

Intangible Nature

The quality of being unable to be touched or grasped physically, often used to describe assets that do not have physical substance but are valuable to a business, like copyrights or goodwill.