A Straddle Represents the Purchase of Either Two Call or Two

question 105

True/False

A straddle represents the purchase of either two call or two put options at the same exercise price.

---

Definitions:

Contra Account

An account used in financial reporting to reduce the value of a related account when the two are netted together.

Effective Interest Rate

The actual return on an investment or cost of a loan considering the effect of compounding interest, distinct from the nominal rate.

Contract Interest Rate

The interest rate specified in a loan or bond agreement, which determines the amount of interest the borrower will pay over the term of the loan.

Face Value

The nominal or dollar value printed on a financial instrument, such as a bond or stock certificate, representing its legal value.