Which of the Following Best Describes the Intrinsic Value of an Option

question 3

Multiple Choice

Which of the following best describes the intrinsic value of an option?

• A) The value it would have if the owner had to exercise it immediately or not at all
• B) The Black-Scholes-Merton price of the option
• C) The lower bound for the option's price
• D) The amount paid for the option

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Definitions:

Function Name

The identifier given to a specific function in programming, which can be called to execute the series of statements within it.

Equal Sign

A symbol used in mathematics and programming to denote equality or assignment, depending on the context.

Arithmetic Operator

Symbols used in mathematics and programming to perform operations such as addition, subtraction, multiplication, and division on numerical values.

Division Operation

A mathematical operation that involves dividing one quantity by another to calculate the quotient.