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

question 102

Multiple Choice

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

---

Definitions:

Federal Reserve Board

The governing body of the Federal Reserve System, responsible for overseeing the U.S. central banking system.

Government Securities

Financial instruments issued by a government to raise funds from the public, including bonds and treasury bills, with a promise to pay back with interest.

Securities

Assets that denote a share in the equity of a corporation available on the public market (stock), a lending agreement with a government or corporate body (bond), or ownership claims evidenced by an option.

New York Federal Reserve Bank

One of the 12 regional Reserve Banks in the Federal Reserve System, playing a key role in monetary policy, financial supervision, and the payment system.