CFA Practice Question

There are 286 practice questions for this topic.

CFA Practice Question

Which of the following makes the early exercise of an American put option less likely?

A. Higher risk-free rate
B. Presence of dividends
C. Sharp decrease in underlying price and volatility
Correct Answer: B

The presence of dividends makes the early exercise of American put options less likely. A higher risk-free rate and a large decrease in stock price with a decrease in volatility make the early exercise of American put options more likely.

User Contributed Comments 0

You need to log in first to add your comment.