Which of the following is true of a call option?

Question

Quizplus · Accepted Answer

The value of a call option prior to expiration includes not only its intrinsic value (the value if exercised immediately) but also its time value, which accounts for the potential of the underlying asset's price to increase before expiration. This means the option's market price can be higher than its immediate exercise value, making choice C correct. Choices A, B, and D are incorrect because a call option's value can indeed be $0 or more (not always less), it can be lower than the value of the underlying asset (since it might have no intrinsic value if out of the money), and it is the buyer, not the seller, who is protected from price volatility through the right to buy at a predetermined price.

Which of the Following Is True of a Call Option