If the intrinsic value of an option is $450 and the price of an option is $560 then the time value of an option is __________?
Correct answer: A. 110
- A. 110
- B. 1010
- C. 450
- D. 560
Explanation
An option’s time value equals its market price minus intrinsic value: $560 − $450 = $110. The remaining $110 reflects the possibility that the option may become more valuable before expiration.
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