The Leverage Strategy of Buying Call Options Is Based on the Idea

question 25

Multiple Choice

The leverage strategy of buying call options is based on the idea that

• A)A small change in the price of the underlying common stock can cause a large change in the price of the option
• B)Leverage reduces the risk of loss on the option contract
• C)Leverage reduces the risk of loss on the portfolio
• D)None of the above

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Definitions:

Nutrients

Substances that provide nourishment essential for growth and the maintenance of life.

Protein Ions

Charged particles formed from proteins by the addition or removal of electrons or through association with a metal ion, important in various biochemical processes.

Negative Charge

An electrical charge characterized by the presence of more electrons than protons, resulting in an attractive force to positive charges.

Resting Potential

A state of a neuron when not transmitting a nerve impulse, characterized by a stable, negative charge.