USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 82

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the following information on put and call options for Citigroup

-Refer to Exhibit 16.4. A short straddle is an appropriate strategy if

• A) an investor wishes to generate additional income.
• B) an investor wished to insure against a decline in share values.
• C) an investor expected share prices to be volatile.
• D) an investor expected share prices to remain in a trading range.
• E) an investor expected share prices to be volatile but was inclined to be bullish.

---

Definitions:

Curare

A toxin derived from South American plants that acts as a neuromuscular blocking agent by inhibiting acetylcholine receptors at the neuromuscular junction, historically used as a paralyzing poison.

Acetylcholine

A neurotransmitter important for learning and memory, as well as muscle contraction, involved in many functions across the nervous system.

Blocks Receptors

Refers to substances or mechanisms that inhibit the action of neurotransmitters by occupying their receptor sites and preventing activation.

Agonist

A chemical or drug that binds to receptors in the brain and causes a reaction or response similar to a naturally occurring substance.