To Provide Insurance Against Declining Prices on Previously Purchased Stock

question 51

Multiple Choice

To provide insurance against declining prices on previously purchased stock, an investor could:

• A) buy a call.
• B) write a put.
• C) buy a stock index option.
• D) buy a put.

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Definitions:

Price Control

Government policies or regulations that set or limit the price of certain goods and services in an attempt to control inflation and ensure affordability.

Steel Makers

Companies involved in the production of steel, an alloy of iron and carbon used widely in construction and manufacturing.

Attempted Monopolization

An action by a firm that involves anticompetitive conduct, the intent to gain monopoly power, and a “dangerous probability” of success in achieving monopoly power.

Antitrust Action

A lawsuit or legal move to challenge practices that restrain trade or competition in the market.