If the stock price is 54, the exercise price is 50, and the put premium is 1, what is the time value?
A) 0
B) 1
C) 3
D) 4

Name: If the stock price is 54, the exercise price is 50, and the put premium is 1, what is the time value? A) 0 B) 1 C) 3 D) 4
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Question

Quizplus · Accepted Answer

The time value is the difference between the put premium and the intrinsic value. The intrinsic value is the difference between the stock price and the exercise price. In this case, the intrinsic value is 54 - 50 = 4. The time value is 1 - 4 = -3.

If the Stock Price Is 54, the Exercise Price Is