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.
E) none of these.

Question

Quizplus · Accepted Answer

American put options are more valuable than their European counterparts as they give the holder the right to exercise the option at any time before the expiration date, whereas European puts can only be exercised on the expiration date. This added flexibility of exercising the option earlier increases the value of American put options.

Relative to European Puts,otherwise Identical American Put Options