Explanation:
Explanation:
Option A (Correct): A put option allows the holder to sell the underlying asset at a predetermined strike price. If the US equity market declines, the investor can profit by purchasing the asset at the lower market price and selling it at the higher strike price.
Option B (Incorrect): A call option allows the holder to buy the underlying asset at a predetermined strike price. This would not be advantageous if the market declines, as the strike price would likely be higher than the market price.
Option C (Incorrect): A currency swap involves exchanging payments in different currencies and does not provide a direct mechanism to profit from a decline in the equity market.
If a European investor anticipates a decline in the US equity market over the next three months, which transaction would most likely enable the investor to profit from this view?
A
A put option.
B
A call option.
C
A currency swap.
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