The Difference Between an American Call Option and a European

question 23

Multiple Choice

The difference between an American call option and a European call option is:

• A) the European call has a final exercise date.
• B) the American call trades only on domestic stocks.
• C) the European call can be exercised only on one day.
• D) the American call generates profits regardless of which direction the stock moves.

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Definitions:

Herfindahl Index

An economic measure of market concentration that sums the squares of the market shares of all firms within the industry.

Conglomerate Merger

A union of companies engaged in entirely different businesses, often to diversify portfolio risks and leverage managerial expertise across industries.

Antitrust Scrutiny

The examination and monitoring of companies and their practices by government agencies to ensure they do not engage in anti-competitive behavior, violating antitrust laws.

Horizontal Merger

A merger between companies that are in direct competition with each other, operating in the same industry and at the same stage of production.