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4. Which of the following creates a bear spread?
A.Buy a low strike price put and sell a high strike price put
B.Buy a high strike price put and sell a low strike price put
C.Buy a high strike price call and sell a low strike price put
D.Buy a high strike price put and sell a low strike price call
A.Buy a low strike price put and sell a high strike price put
B.Buy a high strike price put and sell a low strike price put
C.Buy a high strike price call and sell a low strike price put
D.Buy a high strike price put and sell a low strike price call
Answer: B
A bear spread is created by buying a high strike call and selling a low strike call. Alternatively, it can be created by buying a high strike put and selling a low strike put.
A bear spread is created by buying a high strike call and selling a low strike call. Alternatively, it can be created by buying a high strike put and selling a low strike put.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015