Before Expiration, the Time Value of an In-The-Money Put Option

question 54

Multiple Choice

Before expiration, the time value of an in-the-money put option is always

• A) equal to zero.
• B) negative.
• C) positive.
• D) equal to the stock price minus the exercise price.
• E) None of the options are correct.

---

Definitions:

Efficiency Wage

A theory suggesting that higher wages may increase worker productivity and efficiency by attracting better applicants, reducing turnover, and increasing worker morale.

Contract Curve

Curve showing all efficient allocations of goods between two consumers, or of two inputs between two production functions.

Utility Possibilities Frontier

Curve showing all efficient allocations of resources measured in terms of the utility levels of two individuals.

Production Possibilities Frontier

Curve showing the combinations of two goods that can be produced with fixed quantities of inputs.