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    Question

    An investor who expects a stock price to fall

    significantly might use which strategy?
    A Buy a call option. Correct Answer Incorrect Answer
    B Sell a put option. Correct Answer Incorrect Answer
    C Buy a futures contract. Correct Answer Incorrect Answer
    D Buy a put option. Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    A put option gives the buyer the right to sell at a strike price. If the market price falls below the strike, the put option increases in value.

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