Tele-Tech Com Announces a Major Expansion into Internet Services

question 13

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 a 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 stock 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 stock 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 stock will cause the price of the put option to decreasE.

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Definitions:

Glycoside

A molecule in which a sugar is bound to another functional group or molecule through a glycosidic bond.

D-Aldopentose

A type of aldopentose, which is a 5-carbon sugar with an aldehyde group, having the 'D' configuration.

Alditol

A type of sugar alcohol resulting from the reduction of an aldose, wherein the aldehyde group is converted into a hydroxyl group.

Ruff Degradation

A chemical reaction used for the oxidation of aldoses to smaller aldoses.