The Premium of an American Put Option Is Generally Greater

question 17

Multiple Choice

The premium of an American put option is generally greater than that of the European put option because:

• A) the American option allows for early exercise
• B) the European option allows for early exercise
• C) the American option generally shows more volatility
• D) the European option generally shows more volatility

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Definitions:

Inexpensive Process

A procedure or series of steps that are cost-effective and do not require a significant financial investment.

Useful Data

Information that is relevant, accurate, and can be applied to inform decisions, enhance understanding, or solve a problem.

Domestic Market

A marketplace within a country's borders, representing the total supply and demand for products and services under the jurisdiction of that country's regulations and economic policies.

Global Segmentation

The practice of dividing a market into distinct groups of buyers on a global scale based on various factors like demographics, needs, priorities, common interests, and other psychographic or geographic criteria.