Using Options to Reduce Risk Is Called

question 21

Multiple Choice

Using options to reduce risk is called:

• A)speculation.
• B)a naked position.
• C)hedging.
• D)a covered position.
• E)risk-taking.

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Definitions:

Capital Cost Allowance

A taxable expense in Canada that allows a business to deduct the cost of a capital asset over time.

Half-Year Rule

A tax rule in some jurisdictions that allows only half the usual depreciation expense deduction in the year that a capital asset is acquired.

Straight-Line

A method of calculating depreciation of an asset which assumes the asset depreciates equally over its useful life.

Tax Basis

The value of an asset for tax purposes, used to calculate capital gains or losses upon disposition of the asset.