QUESTION 22 You decide to design a bullish spread with two American call options:...

Name: QUESTION 22 You decide to design a bullish spread with two A
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You decide to design a bullish spread with two American call options: buy the call struck at X₁ = 500 trading at C₁ = $50, write the call struck at X₂ = 560 trading at C₂ = $5. The stock price is currently $530.
If in the next instant the stock price falls to $529, which will be true?

	a.	C₁ will decline faster than C₂ and the value of your spread position will fall
	b.	C₁ will increase faster than C₂ and the value of your spread position will rise
	c.	C₁ will increase faster than C₂ and the value of your spread position will fall
	d.	C₁ will decline faster than C₂ and the value of your spread position will rise

	a.	Its declines as the put nears expiration, all else equal
	b.	It declines at a decreasing rate as the underlying price declines
	c.	It cannot exceed the present value of its strike price
	d.	It increases at an increasing rate as the underlying price declines

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