Options can be used to
A) Modify an equity portfolio's systematic risk.
B) Modify an equity portfolio's unsystematic risk.
C) Manage currency exposures in international equity portfolios.
D) Change a portfolio's exposure to a particular asset
E) All of the above

Question

Quizplus · Accepted Answer

Options can be used for all of the stated purposes. They can be used to modify a portfolio's systematic and unsystematic risk by adjusting the size and mix of positions. They can also be used to manage currency exposures in international portfolios by buying or selling currency options, and they can be used to change a portfolio's exposure to a particular asset by using options on that asset or on related assets.

Options Can Be Used to