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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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