You Buy a Call Option on Merritt Corp

question 66

Multiple Choice

You buy a call option on Merritt Corp.with an exercise price of $50 and an expiration date in July and write a call option on Merritt Corp.with an exercise price of $55 with an expiration date in July.This is called a ________.

• A) time spread
• B) long straddle
• C) short straddle
• D) money spread

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Definitions:

Unreasonable Liability

A legal responsibility or obligation that is excessively burdensome or unfair under the circumstances.

Respondeat Superior

A legal doctrine that holds an employer or principal legally responsible for the wrongful acts of an employee or agent, when such acts occur within the scope of the employment or agency.

Liability

Refers to the legal responsibility for one's acts or omissions.

Partnership Business

A form of business operation between two or more individuals who share management and profits.