An increase in which two of the following will have a negative effect on the value of a put option?
I. risk-free interest rate
II. time to option maturity
III. underlying stock price
IV. option strike price
A)I and II only
B)I and III only
C)II and III only
D)II and IV only
E)III and IV only

Question

Quizplus · Accepted Answer

An increase in the risk-free interest rate or underlying stock price will decrease the value of a put option. As for the other variables, an increase in time to option maturity or option strike price will increase the value of a put option, so they would have a positive effect rather than a negative one.

An Increase in Which Two of the Following Will Have