Asked by Stone Jamison on May 04, 2024
Verified
When the exercise price is increased, it would unambiguously increase the value of an American put option.
American Put Option
A type of options contract that grants the holder the right, but not the obligation, to sell a specified quantity of an underlying asset at a predetermined price before or at the contract's expiration.
- Understand the factors that influence option pricing and their effects.
- Comprehend the criteria that determine whether an option is in the money, at the money, or out of the money.
Verified Answer
AA
Andreu AlegreMay 09, 2024
Final Answer :
True
Explanation :
Increasing the exercise price of an American put option increases its intrinsic value, as the option gives the holder the right to sell the underlying asset at a higher price, thus increasing the option's value.
Learning Objectives
- Understand the factors that influence option pricing and their effects.
- Comprehend the criteria that determine whether an option is in the money, at the money, or out of the money.