The time value of an option is most accurately described

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Reference no: EM131619530

1. The time value of an option is most accurately described as:

A being greatest at the option’s expiration date.

B the entire option premium for an out-of-the-money option.

C the amount by which the intrinsic value exceeds the option premium.

D being typically greater than the option’s intrinsic value for an in-the-money option.

2. An American call option on a stock with 91 days until expiration has an exercise price of $65. The underlying stock is trading at $68 and the risk-free rate is 5%.

The theoretical minimum price for this option is closest to:

A $0.

B $2.86.

C $3.00.

D $3.79.

Reference no: EM131619530

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