The time value of a call option isI) the difference between the option's price and the value it would have if it were expiring immediately.II) the same as the present value of the option's expected future cash flows.III) the difference between the option's price and its expected future value.IV) different from the usual time value of money concept.

A) I
B) I and II
C) II and III
D) II
E) I and IV

Time Value

The idea that money currently in hand is more valuable than the same sum received in the future because of its ability to earn more over time.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock or other asset at a specified price within a certain time frame.

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.