The Portfolio Insurance Approach Works by Using an Offsetting Portfolio

question 20

Multiple Choice

The portfolio insurance approach works by using an offsetting portfolio of:

• A) call options
• B) put options
• C) bought futures
• D) bought warrants

Understand different methods of accounting for long-term construction contracts and their financial statement impacts.

Grasp the concept and financial implications of changing depreciation methods and useful life estimates for fixed assets.

Comprehend the treatment and reporting of changes in accounting estimates.

Identify the differences between changes in accounting principles, changes in accounting estimates, and error corrections.

---

Definitions:

Indifference Curve

A graph showing different combinations of two goods between which a consumer is indifferent, reflecting preferences and trade-offs.

Total Utility

The cumulative satisfaction or value a consumer receives from consuming a particular quantity of goods or services.

Money Income

The total income a person or entity receives in monetary form, including wages, salaries, benefits, and income from investments.

Marginal Rate

A term used to describe the rate at which one variable changes as another variable changes by a single unit, often applied in economic analysis like the marginal tax rate or marginal rate of substitution.