Prior to expiration, the maximum value of an Americana call option and an American put option, respectively, is closest to the: American call option ?American put option?
A. Exercise price, Exercise price
B. Exercise price, Underlying price
C. Underlying price, Exercise price
D. Underlying price, Underlying price
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An investor is long an in-the-money American call option. Would this option most likely ever be exercised early?
A. No.
B. Yes, if its time value is high enough.
C. Yes, if it pays a high enough dividend.
Which statement best describes the early exercise of American options? Early exercise may be advantageous for:
A. both deep-in-the-money calls and deep-in-the-money puts.
B. deep-in-the-money puts.
C. deep-in-the-money calls.
For a stock that pays no dividends, the value of an American call option is most likely:
A. the same as the value of a European call option with otherwise identical features.
B. greater than the value of a European call option with otherwise identical features.
C. less than the value of a European call option with otherwise identical features.
Which of the following statements best describes a feature of an American option? Early exercise of an American:
A. put option is optimal only if the underlying is dividend paying.
B. call option is never optimal if the underlying is dividend paying.
C. put option that is deep in the money may be optimal.