Tele-Tech Com Announces a Major Expansion into Internet Services

question 15

Multiple Choice

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

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

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Definitions:

Hippocampus

A region of the brain that is associated with the formation of memories and spatial navigation.

Visual Designs

The creation and organization of visual elements to communicate messages, evoke emotions, and capture attention in diverse mediums.

Verbal Information

Verbal information involves data or knowledge communicated using words, either spoken or written, as opposed to non-verbal forms of communication.

Context Cues

Elements within the environment that provide guidance or clues for understanding situations, meanings, or behaviors.