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 the above.

Question

Quizplus · Accepted Answer

American options have the added advantage of being exerciseable at any time prior to the expiration date. This makes them more valuable than European options, which can only be exercised at the expiration date. Therefore, otherwise identical American put options are more valuable than European put options.

Relative to European Puts,otherwise Identical American Put Options