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Hedge fund/active strategies1) A straddle trade:A. is a volatility tradeB. is constructed by buying the asset and selling a Calloption on the assetC. both (A) and (B) are correct2) A covered call strategy:A. involves buying stock and buying a CalloptionB. involves shorting stock and writing a CalloptionC. involves buying stock and writing a Calloption3) A covered call strategy:A. involves potentially unlimited profitsB. involves potentially unlimited lossesC. involves losses that are potentially larger thanprofits4) With a protective put strategy, an advantage ofselecting a low strike price for the put option is:A. it provides stronger protection than a put with ahigher strike priceB. it costs less to buy than a put option with a higherstrike priceC. the cash inflow from the premium is higher than for aput option with a higher strike priceD. the maximum loss is smaller than for a put optionwith a higher strike price