Which of the following statements is true?
A) American options are options on securities of U.S. corporations, and the options are traded on American exchanges. European options are options on securities of U.S. corporations, but the options are traded on European exchanges.
B) American options are options on securities which are traded on American exchanges. European options, also traded on American exchanges, are options on European corporations.
C) American options give the holder the right to the dividend payment. European options do not.
D) American options may be exercised anytime up to expiration. European options may be exercised only at expiration.

Question

Quizplus · Accepted Answer

The distinction between American and European options lies in their exercise rights. American options can be exercised at any time up to their expiration date, while European options can only be exercised at the expiration date. This difference does not relate to the geographic location of the securities or exchanges involved.

Which of the Following Statements Is True