The Intrinsic Value of a Call Option

question 9

Multiple Choice

The intrinsic value of a call option:

• A) is the difference between the option price and the interest rate.
• B) must be less than or equal to zero.
• C) is the greater of zero or the difference between the price of the underlying asset and the strike price.
• D) will be negative if the time value of the option is negative.

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Definitions:

Centre-surround

A term most often used in neuroscience that describes how certain neurons in the visual system are organized to respond differentially to light in the center of their receptive field compared to the surround area.

Receptive Field

A receptive field is the specific region of sensory space (e.g., visual or auditory) in which a stimulus will modify the firing of a particular neuron.

Inhibitory Synapse

A type of synaptic connection that decreases the likelihood of the receiving neuron firing an action potential.

Excitatory Synapse

A synapse at which an action in the presynaptic neuron increases the probability of an action potential occurring in the postsynaptic cell, typically by releasing neurotransmitters.