23-40 CBOT catastrophe call spread options have variable payoffs that are capped at a level of less than 100 percent of extreme losses.

Question

Quizplus · Accepted Answer

The statement is true. CBOT catastrophe call spread options have variable payoffs that are capped at a level of less than 100 percent of extreme losses. This means that the maximum amount that can be paid out in the event of an extreme loss is limited, providing some protection for the buyer of the option.

23-40 CBOT Catastrophe Call Spread Options Have Variable Payoffs That