To Maximize His/her Expected Returns,ceteris Paribus,an Investor Who Was Bearish

question 63

Multiple Choice

To maximize his/her expected returns,ceteris paribus,an investor who was bearish on a particular stock would execute which of the following options strategies:

• A)buy calls
• B)write calls
• C)buy puts
• D)write puts

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Definitions:

Corporation's Bonds

Debt securities issued by corporations to raise capital, with the promise to pay back the principal amount along with interest at specified dates.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage.

Premium

The excess of the issue price of bonds over their face amount; the excess of the issue price of stock over its par value.

Bonds Payable

A liability account that records the amount owed by an entity to holders of its bonds, to be repaid at a specified future date.