Stock Index Options 1)permit the Investor to Short the Market Instead of Individual

question 8

Multiple Choice

Stock index options
1) permit the investor to short the market instead of individual stocks
2) require delivery of an index of stocks
3) limit the buyer's potential loss to the cost of the option

• A) 1 and 2
• B) 1 and 3
• C) 2 and 3
• D) all of these choices

---

Definitions:

Prepaid Expense

Prepaid Expense represents payments for goods or services that will be received in the future, recorded as assets until they are consumed or used.

Adjusting Entries

Inserts into financial logs at the conclusion of an accounting interval to dispense incomes and expenditures to their respective periods.

Expense-Liability Relationship

Refers to the financial accounting concept that outlines how expenses incurred by a business relate to its liabilities, influencing the overall financial health.

Faithfully Representative

A qualitative characteristic of financial information that ensures the data accurately reflects the economic phenomena it represents.