00:02
The corrected statements regarding the impact of different factors on the value of the call and put options are as follows the corrected statement regarding the impact of different factors on the value of call and put option.
00:42
On the value of call and put options.
00:58
Increases in the risk -free rate will decreases the value of call option increases in increase in risk -free rate will decrease the value of call option and increase the value of a put option.
01:27
The corrected statement is increase the risk -free rate will decrease the value of call option.
01:59
And increase the value of put option.
02:10
The original statement was incorrect.
02:17
The risk -free rate is used in option pricing models and increase in the risk -free rate increases the discount rate discount reducing the present value of the future cash flows.
02:28
So this affects both call and put options.
02:30
The original statement was statement was incorrect.
02:43
Second is decrease in the exercise price decrease in exercise price will increase the value of a will increase the value of the call option and decrease the value of a put option.
03:20
And decrease the value of which option or is decreasing the stock price.
03:36
Second, the original statement was incorrect.
03:40
The original statement was incorrect.
03:43
See as the exercise price increases the option become less valuable as it becomes less likely to be profitable for the holder...