Which One of the Following Describes the Intrinsic Value of a Put

question 46

Multiple Choice

Which one of the following describes the intrinsic value of a put option?

• A)lesser of the strike price or the stock price
• B)lesser of the stock price minus the exercise price or zero
• C)lesser of the stock price or zero
• D)greater of the strike price minus the stock price or zero
• E)greater of the stock price minus the exercise price or zero

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Definitions:

Financial Intermediaries

Institutions that serve as middlemen between savers and borrowers, like banks, insurance companies, and investment firms, facilitating the flow of funds in the economy.

Net Borrower

An entity or individual that borrows more money than it lends, resulting in a net debt position.

Net Saver

An individual or entity that saves more money than they spend or invest, contributing positively to their financial assets over time.

Utility-Maximizing

Represents the economic principle where individuals or firms make choices that result in the highest possible level of satisfaction or efficiency within their constraints.