A European Option on a Stock Is More Valuable Than

question 62

True/False

A European option on a stock is more valuable than an otherwise similar American option on the same stock.

---

Definitions:

Affirmative Covenants

Provisions in a loan agreement requiring the borrower to undertake certain actions or meet specific conditions.

Negative Covenants

Restrictions in loan agreements that prohibit certain actions by the borrower, intended to protect the interests of the lender.

Debt Covenants

Conditions imposed on borrowers by lenders as part of a loan agreement to protect the lender’s interests by restricting the borrower’s actions.

Earnings Target

A benchmark for financial performance set by a company, reflecting a goal for net income or earnings per share over a specific period.