What happens to the value of call and put options, with everything else held constant, if the risk-free interest rate increases?

Question

Quizplus · Accepted Answer

An increase in the risk-free interest rate increases the cost of carrying the underlying asset, which makes call options more valuable (since buying a call option is cheaper than buying the stock outright). Conversely, put options become less valuable because the increased interest rate decreases the present value of the exercise price, making it less attractive to sell the stock at the strike price in the future.

What Happens to the Value of Call and Put Options