Susan can purchase additional amounts of stock a or stock b


Susan is an officer of firm A. Under a company stock purchase plan, she currently holds $200,000 worth of A's stock, and this represents her total assets. This stock cannot be sold. Susan can purchase additional amounts of stock A or stock B, and she can sell stock B short. It is illegal for her to sell stock A short. How can Susan eliminate the risk in her holding?

a. Susan can buy $100,000 of A and short $300,000 of B
b. Susan can short $240,000 of B
c. Susan can buy put options in A
d. Either a or b.
e. Either b or c.

 

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Finance Basics: Susan can purchase additional amounts of stock a or stock b
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