You Are Cautiously Bullish on the Common Share of the Wildwood

question 19

Multiple Choice

You are cautiously bullish on the common share of the Wildwood Corporation over the next several months. The current price of the share is $50 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes: Ignoring commissions, the cost to establish the bull money spread with calls would be ________.

• A)$1 050
• B)$650
• C)$400
• D)$400 income rather than cost

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Definitions:

Board of Directors

A group of individuals elected by shareholders to oversee the management and make major decisions for a company.

Preferred Stock

A class of ownership in a corporation with a fixed dividend that must be paid out before dividends to common stockholders and which typically does not have voting rights.

Ownership Interest

Refers to the rights and stake a person holds in a particular asset or business, often entailing voting rights and a share in the profits.

Preferred Stock

A class of share ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.