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 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 share 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 share 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 share will cause the price of the put option to decrease.
Correct Answer:
Verified
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