An American Put Option Is Sometimes Exercised Early Because

question 20

Multiple Choice

An American put option is sometimes exercised early because:

• A) The holder of an in-the-money option believes that the stock has bottomed out and expects the stock to rise in the future.
• B) The absolute time value of the option is larger than the insurance value.
• C) The volatility of the stock has just increased.
• D) The skewness of the stock has just increased from its initial level.

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Definitions:

Empowerment

Giving employees authority and responsibility to make decisions about their work.

Insider Trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.

Consultative Management

A leadership approach where managers seek input and feedback from their team before making decisions, promoting a collaborative work environment.

Organizational Structure

The system outlining how activities are directed in order to achieve an organization's goals, defining roles, responsibilities, and the flow of information within the organization.