CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

On a put option the strike price minus the market price is referred to as the ______.

A. speculative premium
B. total premium
C. intrinsic value
Correct Answer: C

The value of a warrant or an option equals the market price minus the strike (exercise) price.

User Contributed Comments 7

User Comment
aakash1108 Intrinsic Value = Max(0,X-S) and not only (X-S)
What if X-S < 0 ??? Then it is 0 I guess.
schweitzdm I don't believe the value is zero, aakash1108.
schweitzdm Actually I take that back!
ankurwa10 this discussion is on another level. someone explain?
birdperson if x-s is less than 0 for a put you wouldn't exercise the option
khalifa92 intrinsic value = exersice value
khalifa92 the value of either put or call is either zero (if exercising the option gains no benefits) or the difference between ST-X (call), X-ST (put).
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