1. Which has the lowest profit potential (measured as a percent of the initial investment) assuming the price of the underlying rises substantially after the position is taken?

A Long put

B Long call

C Covered call

D Long underlying

2. A decrease in the volatility of prices of the underlying asset will:

A increase both put and call option premiums on the underlying asset.

B decrease both put and call option premiums on the underlying asset.

C increase put option premiums and decrease call option premiums on the underlying asset.

D decrease put option premiums and increase call option premiums on the underlying asset.