Chapter 03 · Section 3.1
The components of the premium
What are the two major components of the premium?
c) Time to expiration and Exercise price.
No. The time to expiration and the exercise price influence the premium but they are not the major components.
d) Time value and Intrinsic value.
a) Intrinsic value and Time to expiration.
b) Intrinsic value and Price of the underlying asset.
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