Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

SOFE Exam AFE Topic 1 Question 77 Discussion

Actual exam question for SOFE's Accredited Financial Examiner exam
Question #: 77
Topic #: 1
[All Accredited Financial Examiner Questions]

Insurance entities usually write covered-call options because they consider the premium received for writing the options to be either:

Show Suggested Answer Hide Answer
Suggested Answer: D

by Merissa at May 31, 2024, 07:26 PM

Limited Time Offer

25%

Off

Get Premium AFE Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel
Tyisha
2 months ago
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.
upvoted 0 times
Coral
1 months ago
Yeah, it's all about managing risk and maximizing returns.
upvoted 0 times
...
Cherri
1 months ago
It's like a way for insurance companies to maximize their profits.
upvoted 0 times
...
Vincenza
2 months ago
I agree, the premium is definitely about reducing the yield on the underlying risk security.
upvoted 0 times
...
Kallie
2 months ago
So, it's like a win-win situation for them - reducing risk and increasing returns at the same time.
upvoted 0 times
...
Wynell
2 months ago
It's a smart move by insurance entities to use the premium as a way to manage risk and maximize profits.
upvoted 0 times
...
Nakita
2 months ago
I agree, the premium from writing covered-call options does decrease the yield on the underlying risk security.
upvoted 0 times
...
...
Mollie
3 months ago
I agree with Sarah. Writing covered-call options can provide both an economic hedge and decrease in yield on the underlying risk security.
upvoted 0 times
...
Sarah
3 months ago
I think the answer is C) Both A & B.
upvoted 0 times
...
Kimi
3 months ago
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?
upvoted 0 times
...
Gaynell
3 months ago
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!
upvoted 0 times
Cristal
2 months ago
Yes, it's a great strategy for insurance entities to manage risk and generate additional returns.
upvoted 0 times
...
Ty
2 months ago
Yes, writing covered-call options can provide both protection and income.
upvoted 0 times
...
Brianne
2 months ago
I agree, writing covered-call options can provide both protection and income.
upvoted 0 times
...
Octavio
3 months ago
I agree, it's definitely a win-win situation.
upvoted 0 times
...
...

Save Cancel