730 CHAPTER 14 Complex Financial Instruments GP P14-5. Nature and identification of financial instruments (L.O. 14-1) (Easy - 10 minutes) In relation to stock options, identify whether each of the following statements is true o True/False Item A stock option provides a right to buy but not a right to sell a share. b. An options fair value is at least as high as its intrinsic value. A stock option's fair value increases with the volatility of the underlying stock c d Astock option's exercise price is the price of the share at the time of exercise e. An option's intrinsic value cannot be negative. f. An option's intrinsic value increases with the length of time until the option matures g An in-the-money option is one in which the exercise price is higher than the market price