Consider a One-Year, At-The-Money Call Option on Taggart Stock

question 37

Multiple Choice

Consider a one-year, at-the-money call option on Taggart stock. The effect on the price of this call option of an increase in the risk-free rate from 4% to 6% is closest to:

• A) $0.50 decrease
• B) $0.50 increase
• C) $0.70 decrease
• D) $0.80 increase

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