Consider an American and a European Call Option on a Dividend-Paying

question 24

Multiple Choice

Consider an American and a European call option on a dividend-paying stock, with otherwise identical features (same strike price, etc.) . Which of the following statements is true?

• A) The American call option will never be worth less than the European call option.
• B) The European call option will never be worth less than the American call option.
• C) Both European call and American call option should always have the same value.
• D) The American option can be exercised only on specific dates during the life of the option.

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Definitions:

Motor Neuron

Neuron that controls a muscle or gland.

Muscle Unit

Refers to a motor unit, the smallest functional element of a muscle, consisting of a motor neuron and the skeletal muscle fibers it innervates.

Sarcomere Contraction

The process of muscle fibers shortening, caused by the sliding of actin and myosin filaments within the sarcomere, the fundamental unit of muscle contraction.

Myosin

ATP-dependent motor protein; makes up the thick filaments in a sarcomere.