The Intrinsic Value of an Option Is the Value If

question 3

Multiple Choice

The intrinsic value of an option is the value if it were exercised

• A) immediately
• B) only at the expiration date
• C) out-of-the money
• D) in-the-money

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Definitions:

Odds

The ratio of the probability of an event happening to the probability of it not happening, often used in gambling and statistics.

Probability

A numerical representation, ranging from 0 to 1, indicating the probability of an event's occurrence.

Explanatory Variable

An explanatory variable is a type of independent variable that is used to explain variations in the dependent variable.

Statistical Inference

The process of drawing conclusions about a population's characteristics based on a sample drawn from it.