Which of the Following Describes How American Options Can Be

question 10

Multiple Choice

Which of the following describes how American options can be valued using a binomial tree?

• A) Check whether early exercise is optimal at all nodes where the option is in-the-money
• B) Check whether early exercise is optimal at the final nodes
• C) Check whether early exercise is optimal at the penultimate nodes and the final nodes
• D) None of the above