The value of a call option increases as the risk-free interest rate increases.

Name: The value of a call option increases as the risk-free interest rate increases.
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Question

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The value of a call option is affected by several factors, one of which is the risk-free interest rate. As the risk-free interest rate increases, the value of the call option also increases because the opportunity cost of holding the underlying asset (which is necessary when exercising the call option) increases.

The Value of a Call Option Increases as the Risk-Free