An American option is more valuable than a European option on the same dividend paying stock with the same terms because ______

A. the European option contract is not adjusted for stock splits and stock dividends.
B. the American option can be exercised from the date of purchase until expiration, but the European option can be exercised only at expiration.
C. the European option does not conform to the Black-Scholes model and is often mispriced.
D. the American options are traded on U.S. exchanges offering much more volume and liquidity.

Correct Answer: B