SIE practice questionmediumTime value
If an option is deep in the money and close to expiration, its premium will consist primarily of which?
- AInterest rate value
- BTime value
- CPar value
- DIntrinsic value✓ Correct answer
Explanation
Why D — Intrinsic value
Deep-in-the-money options near expiration are almost all intrinsic value; little time value remains.
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