1. A covered call position is

a. the simultaneous purchase of a call and the underlying asset.

b. the purchase of a share of stock with a simultaneous sale of a call on that stock.

c. the purchase of a share of stock with a simultaneous sale of a put on that stock.

d. the short sale of a stock with a simultaneous sale of a call on that stock.

2. An investor constructs a straddle by buying an April $30 call for $4 and buying an April $30 put for $3. If the price of the underlying shares is $27 at expiration, what is the profit on the position?

a. -$4

b. -$2

c. $2

d. $3

3. An investor believes that a stock will either increase or decrease greatly in value over the next few months but believes a down move is more likely. which of the following strategies will be most appropriate for this investor?

a. a protective put

b. an at-the-money strip

c. an at-the-money strap

d. a straddle