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SOFE Exam AFE Topic 1 Question 77 Discussion

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

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

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Suggested Answer: D

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

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Tyisha
12 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.
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Coral
11 months ago
Yeah, it's all about managing risk and maximizing returns.
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Cherri
11 months ago
It's like a way for insurance companies to maximize their profits.
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Vincenza
11 months ago
I agree, the premium is definitely about reducing the yield on the underlying risk security.
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Kallie
11 months ago
So, it's like a win-win situation for them - reducing risk and increasing returns at the same time.
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Wynell
12 months ago
It's a smart move by insurance entities to use the premium as a way to manage risk and maximize profits.
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Nakita
12 months ago
I agree, the premium from writing covered-call options does decrease the yield on the underlying risk security.
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Mollie
1 years ago
I agree with Sarah. Writing covered-call options can provide both an economic hedge and decrease in yield on the underlying risk security.
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Sarah
1 years ago
I think the answer is C) Both A & B.
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Kimi
1 years 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?
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Gaynell
1 years 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!
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Cristal
12 months ago
Yes, it's a great strategy for insurance entities to manage risk and generate additional returns.
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Ty
12 months ago
Yes, writing covered-call options can provide both protection and income.
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Brianne
12 months ago
I agree, writing covered-call options can provide both protection and income.
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Octavio
12 months ago
I agree, it's definitely a win-win situation.
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