Bull and Bear Spreads Require Taking a Long Position in One

question 32

True/False

Bull and Bear spreads require taking a long position in one option and a short position in another option with a different strike price.

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Definitions:

Fixed Cost

An expense that remains constant regardless of the volume of products or services manufactured or distributed.

Monopoly Profits

The excess profits earned by a monopoly as a result of its ability to set price above marginal costs due to lack of competition.

Duopoly

A market structure dominated by two firms, each of which has significant control over the market price.

Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at different prices.