Which of the Following Correctly Identifies the Impact of These

question 1

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 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:

Elasticities

A measure of how much the quantity demanded or supplied of a good responds to a change in one of its determinants, such as price or income.

Total Sales

The aggregate revenue received from selling goods or services over a given period of time.

Complement

A good or service that is used together with another, where the use or consumption of one increases the value or demand of the other.

Inter-relatedness

The condition or fact of being connected and having reciprocal effects or influences among components or variables.