Options and Their Justifications Quiz

Guaranteeing profits for investors

Eliminating the need for margin accounts

Reducing the risk of stock investments to zero

Expanding the opportunity set available to investors (correct)

By reducing the risk of stock investments to zero

By controlling a claim on the underlying common stock for a much smaller investment (correct)

By guaranteeing profits for the investor

By eliminating the need for margin accounts

Eliminating the need for margin accounts

Reducing the risk of stock investments to zero

Guaranteeing profits for the investor

Decreasing the risk on a short sale for the life of the call (correct)

<p>Duplicate a short sale without a margin account</p> Signup and view all the answers

<p>Maximum loss is known in advance</p> Signup and view all the answers