Tele-Tech Com Announces a Major Expansion into Internet Services

question 51

Multiple Choice

Tele-Tech Com announces a major expansion into Internet services.This announcement causes the price of Tele-Tech Com share to increase, but also causes an increase in price volatility of the share.
Which of the following correctly identifies the impact of these changes on the put option of Tele-
Tech Com?

• A)Both changes cause the price of the put option to decrease.
• B)Both changes cause the price of the put option to increase.
• C)The greater uncertainty will cause the price of the put option to decrease.The higher price
• Of the share will cause the price of the put option to increase.
• D)The greater uncertainty will cause the price of the put option to increase.The higher price
• Of the share will cause the price of the put option to decrease.
• E)The greater uncertainty has no direct effect on the price of the put option.The higher price
• Of the share will cause the price of the put option to decrease.

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Definitions:

Diffusion

The process by which a technological innovation, cultural trend, or new idea spreads through a population or society.

Innovation

The act of introducing something new or improving an existing product, service, or process to enhance productivity or create value.

Entrepreneurs

Individuals who create new businesses, bearing most of the risks and enjoying most of the rewards.

Innovators

Individuals or organizations that introduce new ideas, methods, or products, often leading change and development within industries.