A European put option can be exercised
A)any time in the future.
B)only on the expiration date.
C)if the price of the underlying asset declines below the exercise price.
D)immediately after dividends are paid

Question

Quizplus · Accepted Answer

A European option can only be exercised on the expiration date, unlike an American option, which can be exercised at any time before or on the expiration date. Therefore, option A is incorrect. The option can only be exercised if the price of the underlying asset is below the exercise price, so option C is incorrect. Finally, dividends do not impact the exercise of an option, so option D is incorrect.

A European Put Option Can Be Exercised