Options Have Intrinsic and Market Values

question 9

Multiple Choice

Options have intrinsic and market values:

• A) market value is generally less than intrinsic value
• B) intrinsic value is excess of the current price over the strike price for a call
• C) intrinsic value is excess of the current price over the strike price for a put
• D) market values and intrinsic values are the same

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Definitions:

Equivalent Circuit

A simplified electrical circuit that replicates the performance characteristics of a more complex circuit or electrical device.

Norton's Theorem

An electrical theorem that simplifies complex circuits into equivalent circuits made of a single current source and parallel resistance.

Parallel Resistance

The overall resistance of resistors connected in parallel, calculated in a way that the total resistance is always less than the smallest individual resistor's resistance in the circuit.

Superposition Theorem

A principle that allows for the analysis of circuits with multiple sources by considering the effect of each source separately and then summing the results.