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LOS f: Define intrinsic value and time value, and explain their relationship.
Q1. A call option’s intrinsic value:
A) decreases as the stock price increases above the strike price, while a put option’s intrinsic value increases as the stock price decreases below the strike price.
B) increases as the stock price increases above the strike price, while a put option’s intrinsic value decreases as the stock price decreases below the strike price.
C) increases as the stock price increases above the strike price, while a put option’s intrinsic value increases as the stock price decreases below the strike price.
Q2. The intrinsic value of an option is equal to:
A) the amount that it is in or out of the money.
B) zero or the amount that it is in the money.
C) its speculative value.
Q3. Which of the following best describes the intrinsic value of an option? The intrinsic value is:
A) highest if an option is at the money.
B) its economic value if it is exercised immediately.
C) its economic value if it is exercised at maturity.
Q4. Consider a call option on Intel with an exercise price of $25. The current stock price of Intel is $14. What is the intrinsic value of the call option?
A) $0.
B) $11.
C) $25.
Q5. The price of a stock is $44 per share, and the October put with an exercise price of $45 is selling for $3. The intrinsic value of the option is:
A) $1.00.
B) $2.00.
C) $0.00.
Correct answer is A)
Q6. An option’s intrinsic value is equal to the amount the option is:
A) in the money, and the time value is the intrinsic value minus the market value.
B) in the money, and the time value is the market value minus the intrinsic value.
C) out of the money, and the time value is the market value minus the intrinsic value.
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发表于 2009-3-2 10:44
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