"The Bigger They Are,the Harder They Fall" Describes

question 48

Multiple Choice

"The bigger they are,the harder they fall" describes

• A)a positive linear correlation.
• B)a negative linear correlation.
• C)no correlation.
• D)a nonlinear correlation.

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Definitions:

Long Call

An options trading strategy where the investor purchases a call option with the belief that the underlying asset's price will increase.

Short Put

An options strategy where an investor sells a put option with the expectation that the market price of the underlying asset will rise.

Premium

An amount paid in excess of the nominal value or in addition to the standard cost, often associated with insurance policies or bonds.

Strip

A strategy in bond investing or a derivative trading term where a bond's interest payments and principal repayments are separated and sold as individual zero-coupon securities.