Which of the Following Strategies Makes a Profit When the Stock

question 69

Multiple Choice

Which of the following strategies makes a profit when the stock price declines and loses money when the stock price increases?

• A) long call and short put
• B) long call and long put
• C) short call and short put
• D) short call and long put

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Definitions:

Negative Reinforcement

A behavioral concept where the removal of an unpleasant stimulus following a desired behavior increases the likelihood of that behavior being repeated in the future.

Punishment

A process in which a response is followed by a stimulus that decreases the likelihood of that response being repeated.

Undesirable Behaviours

Actions or reactions that are not wanted or are considered negative by society, a group, or an individual.

Strengthens

To increase in power, magnitude, or effectiveness.