Which of the Following Correctly Identifies the Impact of These

question 22

Multiple Choice

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.

---

Definitions:

Isoquant

An isoquant is a curve that represents all the combinations of inputs that result in the production of a given level of output, illustrating the concept of production efficiency.

Tangency

The point at which two curves meet without intersecting, often used in economics to denote the point of optimal allocation of resources.

Output

The total amount of goods or services produced by a firm or economy over a specific period.

Isoquant

A curve in economic theory that represents all the combinations of inputs which produce the same level of output.