Multiple Choice
Which one of the following statements is correct for an investor who has purchased portfolio insurance by owning a stock and buying a put option on that stock?
A) The investor profits when the stock price declines.
B) Maximum profitability occurs when the stock price equals the exercise price.
C) The value of the position can decline no further than the option's exercise price.
D) The option will certainly be exercised.
Correct Answer:
Verified
Correct Answer:
Verified
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