Which of the Following Correctly Identifies the Impact of These

question 61

Multiple Choice

Which of the following correctly identifies the impact of these changes on the 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 volatility normally will have a positive effect on the price of the put option, but the lower price of the stock will cause the price of the put option to increase.
• D) The volatility normally will have a negative effect on the price of the put option while the lower price of the stock will cause the price of the put option to decrease.
• E) Volatility has no direct effect on the price of the put option while the lower price of the stock will cause the price of the put option to decrease.

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Definitions:

Federal Expenditures

The spending by the federal government of a country, typically on public services, defense, welfare programs, and infrastructure.

Transfer Payments

Payments made by the government to individuals without any expectation of a direct return service or goods, such as social security benefits.

Government Expenditures

Spending by the government on goods, services, and projects to fulfill its various functions, such as infrastructure, education, and defense.