Definitely B. The premium is all about reducing the yield on the underlying risk security. It's like the insurance company is trying to squeeze every last drop of profit out of it.
Hmm, I'm not so sure. Isn't the premium just a way for the insurance entity to make some extra cash on the side? I mean, who cares about the underlying security when you're raking in the dough, right?
I think the answer is C. The premium received for writing covered-call options is both an economic hedge and a decrease in yield on the underlying security. It's a win-win situation!
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