The Intrinsic Value of an Option

question 50

Multiple Choice

The intrinsic value of an option

• A)is equal to the option premium.
• B)is the amount the option actually is worth if it is immediately exercised.
• C)is the amount the option is expected to be worth on its expiration date.
• D)is impossible to determine in the absence of information on the future prices of the underlying asset.

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Definitions:

Market Wage Rates

The prevailing pay rates for specific jobs within a labor market, shaped by factors like supply, demand, and industry standards.

Job Evaluation Points

A quantifiable measure used in job evaluation processes to rate the relative value of different jobs within an organization, based on specific criteria.

Wage Rate

The fixed amount of money or compensation paid to an employee by an employer in return for work performed, typically expressed per hour or per unit of work.

Pay Range

A set spectrum of salaries that an organization is willing to pay for a specific position, considering experience and skill level.