The effects on the price of a call option from an increase in volatility and an increase in interest rates are: ______increase in volatility_________increase in interest rate a)…Decrease…Increase b)…Increase…Increase c)…Increase…Decrease d)…Increase…No Impact

think about the bounds char-lee…C=MAX{0,S-X/1+r^n}…a higher interest rate will increase the price of the option. Volatility is also a major component of option pricing models and any increase in volatility will also increase the price of the option.

yeah, i got the volatility part right i just substituted “call price” with “bond price” in my mind when i was answering the second half of the question, hence why i chose ©… in other words I NEED TO SLOW DOWN! mib20, thanks for clearing my head

b, Volatility is obvious. Rate you can deduce by put call parity. S

WAIT… HOLD ON… now I remember, when I answered this question I was answering it in the world of embedded options in fixed income (a callable bond) in which case © IS the answer

B