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A stock is selling for $35.You buy an April 30 call option for 3.75 and short (write)an April 35 call option for 1.25.You have entered into a vertical spread.If the stock is $43 at expiration,what will your profit or loss be on the spread?
Target Costing
A pricing approach where a company determines the potential selling price of a product and then subtracts desired profit to arrive at a target cost, subsequently focusing on reducing manufacturing costs to meet this target.
Return on Investment
A financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit gained from an investment by the cost of the investment.
Selling Price
The amount a customer pays to purchase a product or service, determined by various factors including cost, competition, and demand.
Target Costing
A pricing method that starts with a market-based price point and then deduces the allowable cost to maintain profitability.
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