Tele-Tech Com Announces a Major Expansion into Internet Services

question 7

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 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 share 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 share 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 share will cause the price of the call option to decrease.

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Definitions:

Exchange Rate

The value of one country's currency expressed in the currency of another country or economic zone.

Alternative Version

A different form or edition of a product, service, or content that offers variety to consumers.

Second Column

In a table or spreadsheet, this refers to the column positioned second from the left.

Currency Exchange Rates

The value of one country's currency expressed in the units of another country's currency, used in the process of exchanging currencies between nations.