SIE practice questionmediumIntrinsic value
If a call has a strike price of $70 and the current stock price is $80, but the premium is $14, what is the time value?
- A$0
- B$14
- C$10
- D$4✓ Correct answer
Explanation
Why D — $4
Intrinsic value is $10; premium is $14, so time value is $4. Time value is always the premium minus intrinsic value.
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