[Madhusudan Chandarasekaran, CFA, FRMKeymaster]

Yes, when curve flattens call option value will increase and the Callable bond value will decrease. Since the question is asking specifically about the call option alone (Not the bond) the value will

Yes, when curve flattens call option value will increase and the Callable bond value will decrease. Since the question is asking specifically about the call option alone (Not the bond) the value will increase. So Choice is not correct. Choice C is the right answer.

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