To safeguard investments, stock owners who believe that the price of their stock will go down during an option period will purchase a
A)futures contract.
B)short contract.
C)call option.
D)put option.
E)margin contract.

Question

Quizplus · Accepted Answer

A put option gives the owner the right to sell their shares at a fixed price for a certain period of time. If the stock price decreases during the option period, the owner can exercise the option and sell their shares at the higher fixed price, protecting their investment. Therefore, purchasing a put option is the best choice to safeguard investments if the stock owner believes the price will go down.

To Safeguard Investments, Stock Owners Who Believe That the Price