The Premium on a Credit Spread Call Option Is the Maximum

question 46

True/False

The premium on a credit spread call option is the maximum loss attainable to the buyer of the option in situations where the credit spread increases.

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Definitions:

Perpetual

An inventory system where updates are made continuously to the inventory records, reflecting each sale or purchase.

Periodic Inventory System

An inventory system in which the inventory count and the cost of goods sold calculation are performed at set intervals, typically at the end of an accounting period.

Periodic Inventory System

An inventory accounting system where updates are made on a periodic basis, rather than continuously, often used for calculating cost of goods sold at the end of an accounting period.

Sales Returns & Allowances

Reductions in sales revenue for products returned by customers or allowances given for damaged goods.