Canadian Securities Course (CSC) Practice Exam

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What is the main characteristic of LT Equity Anticipation options?

Short-term validity
Identical risk/reward profile to regular options
Unable to profit
Restricted to 5 months

The correct answer is: Identical risk/reward profile to regular options

LT Equity Anticipation options inherently have an identical risk/reward profile to regular options. This means that they have the same potential for both gains and losses as regular options. Option A and D are incorrect because they refer to specific limitations or timeliness of LT Equity Anticipation options, which are not defining characteristics. Option C is incorrect because LT Equity Anticipation options, like all options, have the potential for profits depending on the market conditions and the chosen strategy.