Junk Bond

A bond that is rated below investment rate at the time of purchase is known as Junk Bond or High Yield Bond. These types of bond carry high risk of default but they do pay higher yield than the quality bonds which we find thereby making them attractive to the investors.

Option Time Value

Option time value consists of two parts namely intrinsic value and time value.The difference between option value and intrinsic value is the time value. The variation in strike price and spot price is the intrinsic value and its value will never be higher than the option value. Option value on the other hand is derived from the Binomial model.