n NISM Certifications
NSM General NISM
Medium

The intrinsic value of ‘In the money’ option and ‘At the money’ option is always greater than or equal to zero — True or False?

Practice question from NISM Series I - Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. True

    Correct answer

  2. B

    False

Why this is the answer

Intrinsic value is the difference between the spot and strike price. ‘At the money’ options have intrinsic value zero; ‘In the money’ options always have positive intrinsic value.

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