Consider a One-Year, At-The-Money Call Option on Taggart Stock

question 16

Multiple Choice

Consider a one-year, at-the-money call option on Taggart stock. The effect on the price of this call option of an increase in the volatility from 25% to 40% is closest to:

• A) $0.70 increase
• B) $1.70 decrease
• C) $2.30 increase
• D) $2.80 increase

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Definitions:

A-B Type Circuit

A type of electrical circuit configuration that may involve specific path setups for current flow or a particular application's circuit design, but further specific context is needed for a precise definition.

Internally Regulated

Referring to devices or components with built-in regulation mechanisms, typically to manage electrical current or voltage, thereby eliminating the need for external regulation.

Voltage Range Specification

The specified minimum and maximum voltage within which an electrical component or system is designed to operate efficiently and safely.

Voltage Regulator

A device that maintains a constant voltage level automatically, protecting electronic components from fluctuations in the power supply.