Which of the Following Have Similar Profit Graphs

question 18

Multiple Choice

Which of the following have similar profit graphs?

• A)call bull spread and long box spread
• B)put bear spread and short box spread
• C)butterfly spread and ratio spread
• D)calendar spread and call bear spread
• E)none of the above

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Definitions:

Line Segment AB

The part of a line that is bounded by two distinct end points, and contains every point on the line between its endpoints.

Overhead

Overhead refers to the ongoing business expenses not directly tied to creating a product or service but necessary for the business's operations, such as rent, utilities, and salaries.

Law of Diminishing

Refers to the Law of Diminishing Returns, which states that adding more of one factor of production, while holding others constant, will at some point yield lower per-unit returns.

Marginal Returns

The change in output resulting from a one-unit increase in a particular input, while holding other inputs constant.