Final answer:
A put option can be used to hedge against a price decline, and options can suffer losses if the value of the asset moves in the opposite direction of the hedged risk. Options can be more expensive than other hedging devices.
Step-by-step explanation:
Investors can hedge against a price decline by buying a put option, making statement B true.
A put option gives the holder the right, but not the obligation, to sell a specific quantity of an asset at a fixed price, known as the strike price, at anytime before the expiration date.
If the investor believes that the price of the asset will decline, buying a put option gives them the ability to sell the asset at the strike price, thus protecting them from potential losses.
Furthermore, statement C is true.
Options, including put options, do suffer a loss if the value of the asset moves in the opposite direction of that being hedged against.
However, the maximum loss for the holder of a put option is limited to the premium paid for the option.
Statement D, on the other hand, is false.
Options can be more expensive than other hedging devices, such as futures contracts or forward contracts, depending on various factors like the time to expiration, the volatility of the asset's price, and the strike price.