The primary difference between an American and a European option is
A) American options must be exercised on the expiration date.
B) European options must be exercised on the expiration date.
C) American options may be exercised at any point up until the expiration date.
D) European options may be exercised at any point up until the expiration date.

Question

Quizplus · Accepted Answer

The primary difference between an American and a European option is that American options may be exercised at any point up until the expiration date, while European options can only be exercised on the expiration date. Therefore, choice C is the correct answer. Choices A and B both refer to expiration dates, but they are incomplete and do not capture the full difference between the two types of options. Choice D is incorrect as it does not distinguish between the two types of options.

The Primary Difference Between an American and a European Option