Calculate the Intrinsic Value and Time Value of a Put

question 13

Multiple Choice

Calculate the intrinsic value and time value of a put option for which the share price is $19, the strike price is $17.50 and the option price is $0.20.

• A)$0, $0.20
• B)$0, $1.30
• C)$0.20, $0
• D)$1.50, $1.30
• E)$1.30, $1.50

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Definitions:

Owner's Equity Account

Represents the amount of capital that the owner or owners of an entity have contributed, including profits retained in the business and personal withdrawals.

Supplies

Items used in the operation of a business or in the production of goods and services that are typically consumed within a short period.

Purchased

Acquisition of goods or services in exchange for money or its equivalent.

Required

Mandatory or necessary conditions or items specified for a particular purpose or activity.