Using an Option to Reduce the Risk of a Portfolio

question 32

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
• E)verification,speculation

---

Definitions:

Value

The importance, worth, or usefulness of something, often considered in terms of its monetary worth or the benefit it provides to consumers.

Economy Quadrant

A conceptual division of economic activities or conditions into four distinct categories for analysis or strategic planning.

Market Share

The percentage of an industry's total sales that is earned by a particular company over a specified time period, indicating the company's size relative to its competitors.

Monopoly

A market structure where a single company or entity has exclusive control over a particular product or service, limiting competition.