Price of an option is subtracted form time value of option to calculate

A. book value index

B. market index

C. intrinsic value

D. extrinsic value

Answer: Option C

Solution(By Examveda Team)

Price of an option is subtracted form time value of option to calculate intrinsic value. Intrinsic value refers to an investor's perception of the inherent value of an asset, such as a company, stock, option, or real estate. Knowing an investment's intrinsic value is useful for value investors who have a goal of buying stocks and other investments at a discount to this amount.