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

question 8

Multiple Choice

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

• A) The value it would have if the owner were forced to exercise immediately
• 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

---

Definitions:

Partially Disclosed

Pertains to transactions or agreements where some but not all relevant information is revealed to one or more parties involved.

Apparent Authority

The situation in which an agent's actions lead a third party to reasonably believe that the agent has the authority to act on behalf of the principal.

Wholesale Jeweler

A wholesale jeweler is a business entity that sells jewelry in large quantities, usually to retailers rather than directly to the public.

Retail Jewelry Store

A business establishment that specializes in selling jewelry and related accessories directly to consumers.