Which of the Following Statements Is True of Intrinsic Value

question 15

Multiple Choice

Which of the following statements is true of intrinsic value of options?

• A) When the option strike price is more than the spot rate, the intrinsic value is zero.
• B) When the option strike price is equal to the spot rate, the intrinsic value is positive.
• C) When the option strike price is less than the spot rate, the intrinsic value is zero.
• D) When the option strike price is more than the spot rate, the intrinsic value is negative.

---

Definitions:

Multiple R

A statistic that represents the correlation between observed and predicted values of a dependent variable in a regression analysis, indicating model fit.

R Square

The ratio of the variance in the outcome variable that can be attributed to the influence of predictor variables in a regression analysis.

Dependent Variables

Variables in an experiment or model that are affected by changes in the independent variables, typically outcomes or results being measured.

Categorical Variable

A variable that can take on one of a limited, and usually fixed, number of possible values, assigning each individual or other entity to a particular group or nominal category.