Which of the following is not a reason for investors to participate in options?
A)Options eliminate leverage.
B)Options are a smaller investment than stock investments.
C)Options allow investors to trade on the overall market movements.
D)Options can reduce risk.

Question

Quizplus · Accepted Answer

This statement is incorrect as options can actually provide leverage, allowing investors to control a large amount of assets with a smaller investment. The other three options (B, C, and D) are all valid reasons for investors to participate in options. Option B allows for a smaller investment and potential returns, option C can provide diversification and exposure to overall market movements, and option D can be a risk management tool.

Which of the Following Is Not a Reason for Investors