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.

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Definitions:

Explanatory Variables

Variables in a statistical model that are used to explain variations in the dependent variable; also known as independent variables.

Qualitative Predictor Variables

Variables that categorize or describe data based on attributes or qualities, such as gender, color, or type, which do not have a numerical value.

Dummy Variables

Numerical variables used in regression analysis to represent subgroups of the sample in a study.

Regression Model

A statistical technique that models and approximates the relationship between a dependent variable and one or more independent variables.