Derivative is the contract between the parties whose value is decided upon the underlying asset or set of assets such as bonds, interest rates, currencies, indexes, stocks, etc. Intrinsic value: It is the value in options trading which is the difference of current price and strike price of the option. To choose: The correct option.

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Chapter 11, Problem 11.29.2BP

To determine

Introduction: Derivative is the contract between the parties whose value is decided upon the underlying asset or set of assets such as bonds, interest rates, currencies, indexes, stocks, etc.

Intrinsic value: It is the value in options trading which is the difference of current price and strike price of the option.

To choose:The correct option.

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