QUESTION 125

1. Which of the following is correct regarding derivative securities?

   		a. Derivatives can be used for hedging, but not for speculation.
   		b. The use of leverage is both an advantage and a disadvantage of derivatives.
   		c. Derivatives do not contribute to a complete market.
   		d. Most types of derivatives are suitable investments for unsophisticated investors.

QUESTION 126

1. What is the investor's strategy for profit if he sells one XYZ May 80 call at $2 and sells one XYZ May 80 put at $3?

   		a. Bullish.
   		b. Bearish.
   		c. Stability.
   		d. Volatility.