Q602
Intrinsic value of option is subtracted from exercise price of an option to calculate
A.
forward price of asset
B.
price of underlying asset
AnswerC.
future price of asset
D.
spot price of asset
Answer: Option B
Solution
Answer: Option B
Solution:
Intrinsic value of option is subtracted from exercise price of an option to calculate price of underlying asset. The intrinsic value of an option represents the current value of the option, or in other words how much in the money it is.