The lower the risk-free interest rate,the more valuable the option is.

Name: The lower the risk-free interest rate,the more valuable the option is.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The value of an option, especially a call option, is generally negatively correlated with the risk-free interest rate. As the risk-free rate increases, the present value of the exercise price decreases, making the option more valuable. Conversely, a lower risk-free rate makes the option less valuable.

The Lower the Risk-Free Interest Rate,the More Valuable the Option