2. In Table 14.2, notice that among the options expiring in one month, the option with the highest time value is the one with a strike price of $70. Likewise, among the options expiring in three months, the option with a $70 strike has more time value than the options with $65 and $75 strike prices. Why do you think this is so?

TABLE 142 OPTION PRICE COMPONENTS FOR CALL OPTIONS Options Expliring in One Month Options Expiring in Three Months Stock Price Strike PriceMarket Price Intrinsic Value Time Valu Market Price Intrinsic Value Time Value $6.75 $1.76 0.00 $7.69 $4.28 $8.75 $1.75 $0.00 $0.94 $2.63 $2.04 $9.68 $8.74 $450 $2.93 $4.99 $4,50 $71.75$85.00 $71.75 $70.00 $71.75 75.00$2.04