Ask Question
17 September, 12:55

An investor is speculating on the decline in the value of a security and purchases put options on the stock. The news ends up being positive and it results in a rise in the value of the security and the subsequent loss of the entire investment in the put options. This loss is an example of:

+1
Answers (1)
  1. 17 September, 13:52
    0
    Capital risk.

    Explanation:

    Capital risk is defined as the potential to loose all or part of investment. This occurs with investments that do not give a guarantee of return of capital that is invested. The following investment options are prone to capital risk: shares, non government bonds, real estate, and other alternative assets.

    The investor in this instance who purchased a put option and ended up losing the entire investment has lost as a result of capital risk.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “An investor is speculating on the decline in the value of a security and purchases put options on the stock. The news ends up being ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers