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Explain the Difference Between a European Option and an American

question 62

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Explain the difference between a European option and an American option.


Definitions:

Net Present Value

The present value of cash flows minus the present value of cash outlays, used in capital budgeting to assess the profitability of an investment or project.

Discount Rate

Rate used to determine the value today of a dollar received in the future.

Capital Costs

The fixed, one-time expenses incurred on the purchase of land, buildings, construction, and equipment used in the production of goods or services.

Automated Warehouse

A facility where the movement of goods and storage operations are carried out by robotic systems and automated machinery, reducing the need for manual labor.

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