General Studies · Options Pricing and Sensitivities
Assuming all other factors remain constant, which of the following statements is TRUE regarding the relationship between interest rates and option premiums?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Higher interest rates will result in a decrease in the value of a call option and an increase in the value of a put option
- 2Higher interest rates will result in an increase in the value of a call option and a decrease in the value of a put option✓
- 3Higher interest rates will result in an increase in the value of both call and put options
- 4Higher interest rates will result in a decrease in the value of both call and put options
Correct answer
Higher interest rates will result in an increase in the value of a call option and a decrease in the value of a put option
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