To Maximize His/her Expected Returns,ceteris Paribus,an Investor Who Was Bearish

question 63

Multiple Choice

To maximize his/her expected returns,ceteris paribus,an investor who was bearish on a particular stock would execute which of the following options strategies:

• A)buy calls
• B)write calls
• C)buy puts
• D)write puts

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Definitions:

Growth Rate

The rate at which a company's sales, earnings, dividends, or other key metrics increase over a specified period of time.

Transaction Costs

Expenses incurred when buying or selling securities, including broker's fees, commissions, and taxes, which can affect the overall profitability of an investment.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the market capitalization remains the same.

Pre-split Price

The pre-split price is the value of a stock before it undergoes a split, affecting the total number of shares in circulation but not the company's market capitalization.