Relative to European Puts, Otherwise Identical American Put Options

question 18

Multiple Choice

Relative to European puts, otherwise identical American put options

• A) are less valuable.
• B) are more valuable.
• C) are equal in value.
• D) will always be exercised earlier.
• E) None of the options are correct.

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Definitions:

Legal Theory Of Negligence

A legal doctrine that makes a person or entity liable for harm caused by failing to act as a reasonably prudent person would under the same circumstances.

Reasonable Person

A hypothetical individual in law whose behavior serves as a standard of care to determine negligence by comparing actions to those expected of a typical person.

Ordinary Prudence

A standard of care that refers to the caution, attention, or skill a reasonable person would use under similar circumstances.

Standard Of Reasonable Care

A legal benchmark which dictates the level of care an ordinary, prudent person should take in a specific situation to avoid harm to others.