n NISM Certifications
XXI NISM Series XXI-A
Medium

When an investor anticipates a decline in the market, which of the following strategies is most appropriate?

Practice question from NISM XXI A for PMS - Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Buying call options

  2. B

    Selling futures contracts

  3. Buying put options

    Correct answer

  4. D

    Going long on equity index futures

Why this is the answer

Buying puts provides a hedge against falling markets as their value increases when the underlying declines.

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