Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Why can't Intrinsic Value be negative? O A. Not true Intrinsic value can at times be negative B. Black Schotes theory only deals with numbers

image text in transcribed
image text in transcribed
Why can't Intrinsic Value be negative? O A. Not true Intrinsic value can at times be negative B. Black Schotes theory only deals with numbers greater than zero. Negative numbers are not explained. Because the owner of the option can not be forced to exercise. So if the value is negative they just let it OC expire D. Because extrinsic value is negative and therefore they can't both be less than zero As time to expiration of an option is increased, with all else being equal, A. The price of the option may increase or decrease depending on the underlying asset O B. The price of the option will decrease OC. The price of the option will not change D. The price of the option will increase

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Changing Geography Of Banking And Finance

Authors: Pietro Alessandrini ,Michele Fratianni ,Alberto Zazzaro

1st Edition

1441947205, 978-1441947208

More Books

Students also viewed these Finance questions

Question

5. How are diversity, discrimination, and inclusion related?

Answered: 1 week ago

Question

L A -r- P[N]

Answered: 1 week ago