An investor would buy a ________ if he or she believes that the price of the underlying share or asset will fall in the near future.

Question

Quizplus · Accepted Answer

A put option gives the buyer the right, but not the obligation, to sell an underlying share or asset at a specific price within a specific period of time. If the investor believes the price of the underlying asset will fall, they can buy a put option and sell the asset at the higher price they locked in, thereby making a profit. The other options listed do not provide a way to profit from a declining price of an underlying asset.

An Investor Would Buy a ________ If He or She