If You Expect the Price of a Security to Decline

question 45

True/False

If you expect the price of a security to decline, you could buy a call to protect your financial position.

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Definitions:

Economic Event

An occurrence with the potential to affect the financial status or performance of an entity, such as a transaction, market fluctuation, or regulatory change.

Financial Information System

A system that collects and processes financial data to produce reports useful for decision-making purposes.

Fair Market Value

An estimate of the price at which an asset would change hands between a willing buyer and seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Cost

The amount of money or resources expended in order to obtain an item or service.