Explain how an investor can use a stock market index option to hedge a portfolio of common stocks

Indicate whether the statement is true or false.

Answer: An investor can buy enough index puts to protect the portfolio against a decline in value. Losses in the portfolio due to a market decline will be offset by profits from the puts.

Business

You might also like to view...

Which of the following is not included in an abstract?

A) Bene?ts derived. B) Problems. C) Processes used. D) Suggested solutions. E) Report summary.

Business

Non-U.S. firms may list their equity securities on U.S. exchanges by issuing negotiable certificates that represent an equivalent amount of stock ownership. These certificates are known as:

A) American Depositary Receipts. B) Initial Public Offerings. C) Seasoned Public Offerings. D) Negotiable Certificates of Deposit.

Business