Relative to European puts, otherwise identical American put options
A)are less valuable.
B)are more valuable.
C)are equal in value.
D)will always be exercised earlier.

Question

Quizplus · Accepted Answer

American put options give the holder the right to exercise the option at any time before expiration, whereas European put options can only be exercised at expiration. This added flexibility of the American put option makes it more valuable than a European put option, all else being equal. Therefore, American puts are more valuable than European puts.

Relative to European Puts, Otherwise Identical American Put Options