- CFA Exams
- CFA Exam: Level I 2021
- Study Session 16. Derivatives
- Reading 49. Basics of Derivative Pricing and Valuation
- Subject 8. Factors that Affect the Value of an Option

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**CFA Practice Question**

Which factor is DIRECTLY related to the value of a European call option?

B. Risk-free rate of interest

C. Payments of the underlying

A. The exercise price

B. Risk-free rate of interest

C. Payments of the underlying

Correct Answer: B

The call option holder continues to earn interest on the money that could be expended later in paying the exercise price upon exercise of the option.

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