The Practice of Using Options or Dynamic Hedging Strategies to Provide

question 61

Multiple Choice

The practice of using options or dynamic hedging strategies to provide protection against investment losses while maintaining upside potential is called ________.

• A) trading on gamma
• B) index optioning
• C) portfolio insurance
• D) index arbitrage

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Definitions:

Savings Accounts

Deposit accounts held at financial institutions that provide a modest interest rate, allowing individuals to save money securely.

Deposit

A sum of money placed with a financial institution for safekeeping or to earn interest, often used to secure a financial obligation or as part of a financial transaction.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value, reflecting the time value of money.

Present Value

The present value is the present-day valuation of a future money sum or cash flow series, determined by a given rate of return.