- CFA Exams
- CFA Level I Exam
- Topic 7. Derivatives
- Learning Module 8. Pricing and Valuation of Options
- Subject 3. Factors Affecting Option Value
CFA Practice Question
What will be the most likely impact on the value of a European call option with a decrease in the risk-free rate? A. Increase
B. Decrease
C. No impact
Correct Answer: B
The European call option will decrease in value with a decrease in the risk-free rate as the call option value is directly proportional to the risk-free rate.
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