Using Options to Place a Bet on the Direction in Which

question 14

Multiple Choice

Using options to place a bet on the direction in which you believe the market is likely to move is called:

• A)speculation.
• B)hedging.
• C)a covered position.
• D)a naked position.
• E)diversification.

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Definitions:

Hysteresis

The lag in response exhibited by a body when external forces are applied and removed, often observed in magnetic and mechanical systems.

Distribution Transformer

A common transformer used by utility companies to change their line voltage into the 240/120 volts necessary to operate homes and small businesses.

Auto

Often short for automobile; a self-propelled passenger vehicle commonly used for transportation.

Control

The power to influence or direct people's behavior or the course of events.