-Refer to the Above Table

question 14

Multiple Choice

-Refer to the above table. Assuming that opportunity costs are constant, the opportunity cost of producing a bicycle in the United States is equal to ________, and the opportunity cost of producing a bicycle in Mexico is ________.

• A)4 computers; 0.5 computer
• B)0.25 computer; 2 computers
• C)2.67 bicycles; 0.33 computers
• D)0.375 computer; 3 bicycles

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Definitions:

Vertical Spread

An options trading strategy that involves buying and selling of two options of the same type and expiry date but different strike prices.

Time Spread

A strategy in options trading that involves buying and selling options on the same asset with the same strike price but different expiration dates.

Put

An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Put Contract

A financial contract giving the holder the right, but not the obligation, to sell a specific amount of an underlying asset at a set price within a specific time.