The Difference Between an American Option and a European Option

question 41

Multiple Choice

The difference between an American option and a European option is that the American option:

• A)has a fixed exercise price while the European exercise price can vary within a small range.
• B)is a right to buy while a European option is an obligation to buy.
• C)has an expiration date while the European option does not.
• D)is written on 100 shares of the underlying security while the European option covers 1,000 shares.
• E)can be exercised at any time up to the expiration date while the European option can only be exercised on the expiration date.

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Definitions:

Retention

The ability to hold, preserve, and recall information or experiences over time.

Period Of Time

A specific duration marked by a beginning and an end.

Information-Processing Model

Model of memory that assumes the processing of information for memory storage is similar to the way a computer processes memory in a series of three stages.

Human Information Processing

A cognitive approach to understanding how humans perceive, interpret, and respond to information, emphasizing the mental processes involved.