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:

Shock Stage

The initial phase in the body's response to stress, characterized by alarm and mobilization of defenses.

Anticonvulsants

Drugs used to treat mania and depression.

Side Effects

Secondary, often undesirable effects of a drug or medical treatment, beyond the intended therapeutic effects.

Valproate

A medication used to treat epilepsy and bipolar disorder, as well as to prevent migraine headaches.