3. The five factors affecting prices of call and put options Both call and put options are affected by the following five factors: the exercise price, the underlying stock price, the time to expiration, the stock's standard deviation, and the risk-free rate. However, the direction of the effects on call and put options could be different. Use the following table to identify whether each statement describes put options or call options: Put Option Call Option Statement 1. The price of a three-month option is always lower than the price of a six-month option. 2. When the risk-free rate decreases, put prices increase. . 3. An increase in risk-free rate reduces the present value of the option's exercise price. 4. Option prices are lower when the stock price is higher