TRUE/FALSE QUESTIONS

14. Intrinsic value of an option is the profit that can be attained by the immediate exercise of the option. (1 mark) 15. An option is said to be in-the-money if exercising it now will mean profits. Thus, for a put option to be in-the-money, its exercise price must be higher than the spot price of the underlying. (2 marks) 16. A put option has a time premium of RMO.10. Its exercise price is RM6.50. The underlying stock price is now RM6.80. Thus, the put option premium is RM0.40. (2 marks)