Which of the following statements is (are) true ifyou are afraid that the price of the stock that you own may drop in the following months, and you are thinking about using either put options or call options to hedge your stock position?

1. One way to hedge your position would be to short puts.
2. One way to hedge your position would be to write calls.
3. One way to hedge your position would be to buy a straddle.
4. Hedging with shorting call optionsis better than hedging withbuyingput options should thedecline in stock price is likely.

Multiple Choice

a) II only

b) I, II, and IV

c) I only

d) I and III only