The Purchase of a June 25 Call on XXO Share

question 74

Multiple Choice

The purchase of a June 25 call on XXO share and the sale of a June 30 call on XXO share is known as a

• A) horizontal spread.
• B) long straddle.
• C) vertical spread.
• D) short straddle.

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Definitions:

Life Insurance

Life Insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.

Taxable

Referring to income or transactions that are subject to taxation by government authorities.

Social Security Benefits

Payments made to qualified individuals from the Social Security Administration, typically for retirement, disability, or survivorship.

Tax-Exempt Interest

This is interest income that is not subject to federal income tax, and in some cases, state or local taxes. Such interest is often earned from bonds issued by municipal, state, or other government entities.