Which of the Following Are Not Path-Dependent Options When the Stock

question 7

Multiple Choice

Which of the following are not path-dependent options when the stock pays a constant dividend yield?

• A)European calls and European puts
• B)European calls and American puts
• C)American puts and European puts
• D)American puts and European calls
• E)none of the above

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Definitions:

Fiduciary Responsibility

The obligation to act in the best interest of another party, such as a trustee acting for the benefit of the trust's beneficiaries.

Prudently

Acting with or showing care and thought for the future, often within the context of managing finances or making financial decisions.

Ex-Dividend Date

The cutoff date established by a company by which investors must be on the company's books to receive the next dividend payment.

Homemade Dividend Policy

A strategy in which investors create their own dividend policy by selling a portion of their portfolio of equities.