Six-Month Call Options with Strike Prices of $35 and $40

question 8

Multiple Choice

Six-month call options with strike prices of $35 and $40 cost $6 and $4,respectively.What is the maximum gain when a bull spread is created by trading a total of 200 options?

• A) $100
• B) $200
• C) $300
• D) $400

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Definitions:

Percentage of Net Assets

This refers to a metric that calculates what portion of a company’s total net assets is represented by a particular investment or asset class.

Retained Earnings Account

An equity account that represents the accumulated portion of net income left over after dividends are paid to shareholders.

Cumulative Earnings

The total net income of a company since its inception, minus any dividends paid to shareholders.

Dividends

Distributions to shareholders from a company, typically originating from the profits earned by the corporation.