The value of a call option ________ with the risk-free rate,and the value of a put option ________ with the risk-free rate.
A)increases,increases
B)decreases,decreases
C)increases,decreases
D)decreases,increases
E)increases,does not change

Question

Quizplus · Accepted Answer

The value of a call option increases with the risk-free rate because the present value of the exercise price decreases, making it more attractive to hold the option. Conversely, the value of a put option decreases as the risk-free rate increases because the present value of the exercise price decreases, making it less attractive to exercise the option.

The Value of a Call Option ________ with the Risk-Free