A Short Straddle

question 137

Multiple Choice

A short straddle:

• A)consists of a long call and a long put
• B)consists of a long and a short call with same exercise price
• C)will make the greatest profit if the share price at expiry is as close as possible to the exercise price
• D)is a strategy that profits from high volatility.
• E)None of these.

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Definitions:

Crowding Out

A situation in economics where increased public sector spending reduces or eliminates private sector spending.

Government Borrowing

The act of governments raising funds through the issuance of securities or bonds to finance public expenditure, leading to government debt.

Personal Income Taxes

Taxes imposed on individuals' income by the government, including wages, salaries, and investment earnings.

Federal Tax Revenues

The income earned by the government through all types of taxes, including income, payroll, and excise taxes, used to fund public services and operations.