1. If the current stock price is $10, and the premium of a call option with a strike price of $12 is $1, then the intrinsic value of the option is (a) $10 (b) $1 (c) -$2 (d) $2 (e) $0 2. Which of the following scenarios can happen to someone who just longed a put option today (a) You received the put premium today (b) Your payoff can become negative going forward (c) You will exercise the option if the underlying's market price becomes higher than the strike price (d) You paid the premium today (e) You are more likely to make money if the underlying's price decreases in the future 3. Which of the following stock options are out of the money? (a) A call option with a strike price of $100 on a stock that is selling for $110 in the spot market (b) A call option with a strike price of $50 on a stock that is selling for $45 in the spot market (c) A put option with a strike price of $45 on a stock that is selling for $45 in the spot market (d) A put option with a strike price of $30 on a stock that is selling for $40 in the spot market