Asked by Mariana Rivera on Jun 25, 2024
Verified
The intrinsic value of a call is another name for the market price of a call.
Intrinsic Value
The true, inherent, and objective value of an asset, independent of its current market price, determined through fundamental analysis.
Market Price
The current price at which an asset or service can be bought or sold.
Call
In finance, a call refers to an option contract that gives the holder the right, but not the obligation, to buy a stock, bond, commodity, or other instruments at a specified price within a specific time period.
- Understand the distinction between intrinsic value and market price of call options.
Verified Answer
ZK
Zybrea KnightJul 02, 2024
Final Answer :
False
Explanation :
The intrinsic value of a call option is the difference between the underlying stock's price and the strike price of the call, only when the stock's price is above the strike price. It is not the same as the market price of the call, which also includes time value and other factors.
Learning Objectives
- Understand the distinction between intrinsic value and market price of call options.