Before Expiration, the Time Value of a Call Option Is

question 24

Multiple Choice

Before expiration, the time value of a call option is equal to

• A) zero.
• B) the actual call price minus the intrinsic value of the call.
• C) the intrinsic value of the call.
• D) the actual call price plus the intrinsic value of the call.

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Definitions:

Equity Model

A theory in social psychology that posits individuals assess fairness in relationships by comparing their inputs and outcomes to those of others.

Perceived Inequity

The feeling or assessment by individuals that they are not receiving a fair share of resources, recognition, or benefits compared to others.

Individual's Feelings

Personal emotions or affective states that are unique to an individual, reflecting their personal reactions or sentiments.

Perceived Inequity

The feeling or perception that one's rewards or outcomes are not fair in comparison to others' rewards or outcomes, leading to feelings of injustice.