In case of normal swings in the risk-free rate, option prices are not very sensitive to changes in the risk-free rate.

Question

Quizplus · Accepted Answer

Option pricing models, such as the Black-Scholes model, take into account the risk-free rate as one of the input variables. However, the impact of changes in the risk-free rate on option prices is relatively small compared to other factors such as the current market price of the underlying asset, the strike price, and the time to expiration. Therefore, in normal swings of the risk-free rate, option prices are not very sensitive to its changes.

In Case of Normal Swings in the Risk-Free Rate, Option