The time value of an option is added into intrinsic value to calculate __________?
Correct answer: D. price of an optionCommodities & Futures Trading
- A. market index of an option
- B. depreciated value of option
- C. appreciated value of option
- D. price of an optionCommodities & Futures Trading
Explanation
An option’s price, also called its premium, consists of intrinsic value plus time value. Intrinsic value reflects immediate exercise, while time value reflects the possibility of a favourable future change.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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