8. The five factors affecting prices of call and put options Aa Aa E 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. As the risk-free rate decreases, the value of the option decreases. 2. A shorter maturity in-the-money option on a low-risk stock is more valuable than the same longer maturity option. 3. Option prices increase if the stock price increases. 4. Option prices are higher when the stock price is lower. oo oo