For a Given Call Option Price, Which of the Following

question 104

Multiple Choice

For a given call option price, which of the following statements is correct?

• A) The closer the strike price is to the current price of the underlying asset, the smaller the time value of the option.
• B) The closer the strike price is to the current price of the underlying asset, the larger is the time value of the option.
• C) As the strike price approaches the price of the underlying asset, the time value of the option approaches zero.
• D) As the strike price approaches the price of the underlying asset, the intrinsic value of the option increases and the time value of the option decreases.

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