A Call Option Can Be Used to Hedge the Risk

question 107

True/False

A call option can be used to hedge the risk of a price rise in the underlying asset.It establishes a price cap for acquiring the asset equal to the exercise price.

---

Definitions:

Passive

Lacking in active response or involvement; allowing or subject to action without opposition or resistance.

Environmental Circumstances

The context or conditions in one's surroundings, including social, cultural, and physical environments, that influence outcomes and opportunities.

Human Behaviour

The range of actions and mannerisms exhibited by humans in conjunction with their environment, social structures, and culture.

Humanist

An individual who adopts a philosophical stance emphasizing the value and agency of human beings, individually and collectively.