Question

c. Whom do you think should have a collar?

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Answer 1

Answer:

Collars are both functional and decorative features sewn to the neckline of a garment. As decoration, the collar is often the focal point of the garment drawing the eye upward to frame the face. As a functional feature, collars often provide warmth and protection from the elements.

Answer 2

Answer:

A collar, commonly known as a hedge wrapper, is an options strategy implemented to protect against large losses, but it also limits large gains. An investor creates a collar position by purchasing an out-of-the-money put option while simultaneously writing an out-of-the-money call option. The put protects the trader in case the price of the stock drops. Writing the call produces income (which ideally should offset the cost of buying the put) and allows the trader to profit on the stock up to the strike price of the call, but not higher.

Explanation: