The time value of an option is
I.he difference between the option's price and the value it would have if it were expiring immediately.
II.the same as the present value of the option's expected future cash flows.
III.the difference between the option's price and its expected future value.
IV.different from the usual time value of money concept.
A) I
B) I and II
C) II and III
D) II
E) I and IV

Question

Quizplus · Accepted Answer

The time value of an option is the difference between the option's price and the intrinsic value if it were expiring immediately (I). It is also different from the usual time value of money concept (IV), as it relates to the potential for future gains rather than the present value of expected cash flows.

The Time Value of an Option Is