Put/Calls

Question 1

why does a call at strike 100 cost more than a call at strike 120?

Answer 1

as 100 is more profitable

Question 1

bear spread

Answer 1

makes money if price drops

Question 2

bull spread

Answer 2

makes money if price increases

Question 3

a derivative costs money if

Answer 3

payoff is greater than or equal to zero according to PP0

Question 4

two period model assumes

Answer 4

interest rate=0