f. define intrinsic value and time value, and explain their relationship;
in the money options has an intrisic value.
In the case of a call option, current market price - Exercise price, if it is a positive quantity is its intrinsic value. If it is a negative value, then intrinsic value is zero.
Time value of an option is option value or premium at a market price minus the intrinsic value at that market price.
Even if intrinsic value is zero, options have time value.
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