Chapter 03 · Section 3.1

The time value of an option

The time value of an option is:

a) the time remaining in the option.
• b) the interest rate.
  No. The interest rate has an influence on the time value but it is not the time value.
  c) the difference between the premium and the intrinsic value.
  d) the exercise price.
  e) the volatility of the underlying asset.

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