1) Increases in the risk-free rate will _________ the value of a call option and _________ the value of a put option.

a) Increase; decrease

b) Not change; not change

c) Increase; increase

d) Decrease; decrease

2) Decreases in the exercise price will ________ the value of a call option and ________ the value of a put option.

a) Decrease; decrease

b) Not change; not change

c) Increase; increase

d) Increase; decrease

3)Decreases in the stock price (S) will _______ the value of a call option and ______ the value of a put option.

a) Decrease; decrease

b) Increase; increase

c) Increase; decrease

d) Decrease; increase

4) Increases in the stock volatility (sigma) will _______ the value of a call option and ______ the value of a put option.

a) Increase; decrease

b) Increase; increase

c) Decrease; decrease

d) Decrease; increase

5)Lengthening the time to maturity will ________ the value of a call option and _______ the value of a put option.

a) Decrease; increase

b) Decrease; decrease

c)Increase; increase

d)Increase; decrease