Reading 70: Option Markets and Contracts- LOSm～ Q1-3 decrease, following, increase, change, interest

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LOS m: Indicate the directional effect of an interest rate change or volatility change on an option's price.

Q1. For stock options, which of the following will least likely increase put option values and decrease call option values?

A)   A decrease in the riskless rate of interest.

B)   An increase in the exercise price.

C)   An increase in the riskless rate of interest.

 

Q2. A decrease in the riskless rate of interest, other things equal, will:

A)   decrease call option values and decrease put option values.

B)   decrease call option values and increase put option values.

C)   increase call option values and decrease put option values.

 

Q3. An increase in the riskless rate of interest, other things equal, will:

A)   decrease call option values and increase put option values.

B)   decrease call option values and decrease put option values

C)   increase call option values and decrease put option values.

 

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