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Strategy and the maximum profit

An investor sells a June 2008 call of ABC Limited with a strike price of USD 45 for USD 3 and buys a June 2008 call of ABC Limited with a strike price of USD 40 for USD 5. What is the name of this strategy and the maximum profit and loss the investor could incur?

A. Bear spread, maximum loss USD 2, maximum profit USD 3

B. Bull spread, maximum loss Unlimited, maximum profit USD 3

C. Bear spread, maximum loss USD 2, maximum profit unlimited

D. Bull spread, maximum loss USD 2, maximum profit USD 3

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Strategy and the maximum profit

Reference No:- TGS0673679

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : Compute the actual manufacturing overhead cost rates

Q : Calculate the final profit

Q : What is the impact on the firm-s value

Q : How each control plan helps to accomplish

Q : Strategy and the maximum profit

Q : Prepare journal entries related to bonds and bond interest

Q : Determining the cheapest-to-deliver

Q : Find the impact on likelihood of the new projects

Q : Shares of takedown enterprises on january

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Strategy and the maximum profit

Reference No:- TGS0673679

Recent Questions Asked Finance Basics

Q : Compute the actual manufacturing overhead cost rates

Q : Calculate the final profit

Q : What is the impact on the firm-s value

Q : How each control plan helps to accomplish

Q : Strategy and the maximum profit

Q : Prepare journal entries related to bonds and bond interest

Q : Determining the cheapest-to-deliver

Q : Find the impact on likelihood of the new projects

Q : Shares of takedown enterprises on january

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