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A bull call spread is created by:
ABuying a higher-strike call and selling a lower-strike call
BBuying two calls at different expiries
CBuying a lower-strike call and selling a higher-strike call
DBuying a call and a put at the same strike
Answer & Solution
Correct answer: C. Buying a lower-strike call and selling a higher-strike call
1. Identify what the question asks: this concept maps to bullspread (§6.5).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (C).
_Source: ICAI BoS CA Final Paper 2, Ch 9 "Derivatives Analysis and Valuation"_
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