How does the price of a put option respond to an interest rate increase?
A)Increases
B)Decreases
C)Remains the same
D)Goes to zero

Question

Quizplus · Accepted Answer

The price of a put option typically decreases when interest rates increase. This is because the present value of the exercise price, which the put option holder can sell the underlying asset for, decreases as interest rates rise, making the put option less valuable.

How Does the Price of a Put Option Respond to an Interest