Covered Calls Are a Less Costly Way to Protect Stocks

question 4

True/False

Covered calls are a less costly way to protect stocks because you receive money for the sale of the call,whereas you must pay money for a protective put.

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Definitions:

Poisson Probabilities

The likelihood of a given number of events happening in a fixed interval of time or space, assuming the events occur with a known constant mean rate and independently of the time since the last event.

Poisson Distribution

A probability distribution that expresses the probability of a given number of events occurring in a fixed interval of time or space when these events occur with a known constant rate and independently of the time since the last event.

Expected Frequency

The predicted number of times an event or outcome occurs within a specific interval, based on a probability model.

Uniformly Distributed

A type of distribution in which all outcomes are equally likely; the probability density function is constant.