The difference between the intrinsic value of option and the price of option is classified as _____________?
Correct answer: C. time value of option
- A. spot value of option
- B. time value of US treasury
- C. time value of option
- D. time value of bondCompare Credit Cards
Explanation
An option premium consists of intrinsic value and time value, so time value is the premium minus intrinsic value. “Time value of option” is therefore the relevant term, not a value associated with a bond or Treasury.
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