Which of the Following Statements About a Covered Call Writing

question 48

Multiple Choice

Which of the following statements about a covered call writing strategy is true?

• A)the losses are limited
• B)return and risk are greater than that of simply holding the stock
• C)it is a cheaper form of insurance than a protective put
• D)it generally makes a large number of small profits
• E)none of the above

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Definitions:

AC

Alternating Current, a type of electrical current where the current's direction and amplitude vary cyclically.

DC

DC stands for direct current, which is an electrical current that flows in one direction only, used in batteries, electronics, and some power supplies.

Capacitance Unit

The unit of measurement for capacitance, the farad (F), indicating the ability of a system to store an electric charge.

Farad

The unit of capacitance in the International System of Units (SI), symbolized as F, indicating the capacity of a capacitor to store charge per unit voltage.