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To Construct a Bear Spread, the Investor Buys a Call

question 14

True/False

To construct a bear spread, the investor buys a call option and shorts the stock.


Definitions:

Initial Investment

The amount of money used to start an investment project or venture.

Mutually Exclusive

A situation where the occurrence of one event means the other cannot occur at the same time.

NPV

Net Present Value, a calculation used to assess the profitability of an investment, considering the time value of money.

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