USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 50

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

-Refer to Exhibit 16.8. If you establish a long strap using the options with a 95 exercise price, what is your dollar gain or loss if at expiration XYZ is still trading at 101 11/16?

• A) $81.25 loss
• B) $1,606.25 gain
• C) $1,606.25 loss
• D) $268.75 loss
• E) $268.75 gain

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Definitions:

Perceptual Constancy

The brain's ability to recognize objects as unchanging despite shifts in environmental conditions, like changes in lighting, angle, or distance.

Ponzo Illusion

A visual illusion where two identical lines appear to be different lengths due to converging parallel lines in the background.

Evening Mealtime

The period of the day when dinner is typically consumed, usually in the evening, varying culturally and personally.