Which One of the Following Is a Bear Call Spread

question 29

Multiple Choice

Which one of the following is a bear call spread?

• A)buying a $20 call and selling a $25 call on the same stock
• B)selling a $20 call and buying a $20 call on the same stock
• C)buying a $20 call and selling a $15 call on the same stock
• D)selling a $20 call and buying a $25 put
• E)buying a $20 call and selling a $25 put

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Definitions:

Utility Function

Reflects the consumer's preferences, assigning values to combinations of goods and services to indicate the satisfaction gained from them.

Compensating Variation

An economic concept that quantifies the amount of money needed to compensate someone for a policy change, maintaining their original utility level.

Consumption

The process by which goods and services are utilized by individuals or households to satisfy their needs and wants.

Utility Function

A mathematical representation that assigns numerical values to different bundles of goods, showing the satisfaction or utility those goods generate for a consumer.