A Stock Price Is Currently $23

question 15

Multiple Choice

A stock price is currently $23.A reverse (i.e short) butterfly spread is created from options with strike prices of $20,$25,and $30.Which of the following is true?

• A)The gain when the stock price is greater that $30 is less than the gain when the stock price is less than $20
• B)The gain when the stock price is greater that $30 is greater than the gain when the stock price is less than $20
• C)The gain when the stock price is greater that $30 is the same as the gain when the stock price is less than $20
• D)It is incorrect to assume that there is always a gain when the stock price is greater than $30 or less than $20

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Definitions:

Negative Reinforcement

A behavioral conditioning principle where the removal of an undesirable or aversive stimulus following a behavior increases the likelihood of that behavior being repeated.

Aversive Stimulus

A stimulus that is unpleasant or painful, leading to avoidance behavior.

Delay

The period between the onset of the conditioned stimulus and the onset of the unconditioned stimulus in the conditioning process.

Aversive Stimulus

A stimulus that is unpleasant or painful, often used to modify behavior through avoidance learning or negative reinforcement.