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Basic Question 12 of 14
An American option is more valuable than a European option on the same dividend paying stock with the same terms because ______
B. the American option can be exercised from the date of purchase until expiration, but the European option can be exercised only at expiration.
C. the European option does not conform to the Black-Scholes model and is often mispriced.
D. the American options are traded on U.S. exchanges offering much more volume and liquidity.
A. the European option contract is not adjusted for stock splits and stock dividends.
B. the American option can be exercised from the date of purchase until expiration, but the European option can be exercised only at expiration.
C. the European option does not conform to the Black-Scholes model and is often mispriced.
D. the American options are traded on U.S. exchanges offering much more volume and liquidity.
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I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
identify the factors that determine the value of an option and describe how each factor affects the value of an option
CFA® 2024 Level I Curriculum, Volume 5, Module 8.