- CFA Exams
- CFA Level I Exam
- Study Session 16. Derivatives
- Reading 49. Basics of Derivative Pricing and Valuation
- Subject 8. Factors that Affect the Value of an Option
CFA Practice Question
Which factor is DIRECTLY related to the value of a European put option?
B. Risk-free rate of interest
C. Cost of carry
A. Volatility of the underlying
B. Risk-free rate of interest
C. Cost of carry
Correct Answer: A
User Contributed Comments 2
| User | Comment |
|---|---|
| Ricey | Shouldn't it be B? higher risk-free rate results in lower put option value. |
| breh | @Ricey: A is just more directly related. |