European option

CFA Level I Derivatives
#1

During the life of a European option, the amount by which its price is greater than its exercise value is most accurately described as its:

A: time value
B: moneyness
C: intrinsic value

The answer is A. Why isn’t the answer B? Any help on this would be appreciated. Thanks.

#2

Moneyness is the condition of being in the money, at the money, or else out of the money.

In the usual plot of the payoff on an option, moneyness would be measured horizontally, while price (& value) would be measured vertically.