Vidyalelo
Commerce · Q665

Financial Management

Graduate and Post Graduate · Commerce · question 665

Q665

Market value of option which is out-of-money is

A.
greater than zero
Answer
B.
equal to zero
C.
lesser than zero
D.
equal to one

Answer: Option A

Solution

Answer: Option A
Solution:
Market value of option which is out-of-money is greater than zero. The market price of the option is the price you pay when you buy the option and the price you get when you sell the option. The market price of the option consists of two parts, intrinsic value and time value.