Using an Option to Reduce the Risk of a Portfolio

question 80

Multiple Choice

Using an option to reduce the risk of a portfolio is called ________, while using options to bet on the direction of the market or an asset is called ________.

• A) hedging, speculation
• B) hedging, verification
• C) verification, hedging
• D) speculation, hedging

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Definitions:

Discontinuity Effect

The observation that individuals in groups tend to adopt more extreme positions or behaviors than they would individually.

Aggressiveness

Behavior characterized by assertiveness and possibly hostility, often aimed at achieving a goal or expressing anger or dominance.

Individual Member

A single participant or contributor within a group or organization, distinguished by their unique contributions and perspectives.

Insko

Another name associated with academic research or a specific contribution in a field such as psychology or sociology; further context is needed for a precise definition.