The Owner of a Large, Diversified Stock Portfolio Could Hedge

question 88

Multiple Choice

The owner of a large, diversified stock portfolio could hedge against a steep decline in prices by

• A) buying call options on a stock index.
• B) buying put options on a stock index.
• C) selling put options on a stock index.
• D) buying both call and put options with the same expiration date.

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Definitions:

Diencephalon

A division of the brain lying between the midbrain and the cerebral hemispheres that includes the thalamus, hypothalamus, and third ventricle.

Medulla Oblongata

The medulla oblongata is the lower portion of the brainstem, controlling vital functions such as breathing, heart rate, and blood pressure.

Midbrain

A central part of the brainstem involved in vision, hearing, motor control, sleep/wake, arousal (alertness), and temperature regulation.

Cerebral Peduncles

Structures at the base of the brain, containing nerve tracts that connect the cerebrum with other parts of the brain and spinal cord.