The Fact That American Put Values May Not Equal the Price

question 27

Multiple Choice

The fact that American put values may not equal the price implied by put-call parity is attributable to the possibility of what event?

• A) changes in the dividend
• B) early exercise
• C) interest rate declines
• D) interest rate rises

---

Definitions:

Oceanic Crust

The part of the Earth's crust that underlies the ocean basins, generally thinner and more dense than continental crust, formed at mid-ocean ridges and recycled into the mantle at subduction zones.

Sheeted Dikes

A geological formation consisting of numerous parallel dikes formed when magma intrudes into a crack then solidifies.

Subduction-derived Magma

Magma that is formed by the melting of subducted oceanic crust beneath a continental plate.

Belts of Volcanoes

Regions characterized by the alignment of multiple volcanoes, often situated along the boundaries of tectonic plates where volcanic activity is concentrated.