What Is the Difference Between a European Option and an American

question 15

Essay

What is the difference between a European option and an American op- tion?

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Definitions:

Binomial Probability Distribution

A probability distribution that summarizes the likelihood that a variable will take one of two independent values under a given set of parameters or conditions.

Binomial Problem

A statistical question or experiment that has exactly two possible outcomes, 'success' or 'failure', and where the probability of success is the same each time the experiment is conducted.

Standard Deviation

Standard deviation is a measure of the amount of variation or dispersion in a set of values, indicating how much the values in a dataset deviate from the mean.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values in a data set vary from the mean.