An option that may be exercised at any time up to its expiration date is called a(n) _____ option.
A) futures
B) Asian
C) Bermudan
D) European
E) American

Question

Quizplus · Accepted Answer

An American option can be exercised at any time up to its expiration date, whereas a European option can only be exercised on the expiration date. Bermudan options can only be exercised on specific dates, while Asian options have a payoff based on the average price of the underlying asset over a certain period of time. Futures options are options on futures contracts rather than on individual underlying assets. Therefore, option E, American option, is the best choice.

An Option That May Be Exercised at Any Time Up