Which of the following statements is NOT true?
A)An increase in interest rates decreases the value of a call option.
B)An increase in volatility increases the value of a call option.
C)A decrease in volatility decreases the value of a put option.
D)An increase in the underlying asset's price decreases the value of a put.

Question

Quizplus · Accepted Answer

An increase in interest rates actually increases the value of a call option, not decreases. This is because higher interest rates reduce the present value of the exercise price, making it cheaper to buy the asset in the future, thus increasing the call option's value.

Which of the Following Statements Is NOT True