CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

Which factors ENCOURAGE early exercise of American puts?
A. Dividends
B. Underlying volatility
C. Carrying costs on the underlying
Explanation: Carrying costs discourage exercise for American calls and encourage exercise for American puts.

User Contributed Comments 3

User Comment
alexchav For american calls, answer would be dividends.
mjbilliard If the underlying has carrying costs, why would you want to buy the underlying early ( exercise the put) ?
danbacarin ..when you exercise a put you sell the underlying
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