Q1. One can create a butterfly spread using 3 put options. (True/ False) Q2. Whi

ID: 2754762 • Letter: Q

Question

Q1. One can create a butterfly spread using 3 put options. (True/ False)

Q2. Which of the following statements is correct about the early exercise of American options?

A) It is always optimal to exercise an American call option on a non-dividend-paying stock before the expiration date.

B) It can be optimal to exercise an American put option on a non-dividend-paying stock early.

C) It can be optimal to exercise an American call option on a non-dividend-paying stock early.

D) It is never optimal to exercise an American put option on a non-dividend-paying stock before the expiration date.

A) It is always optimal to exercise an American call option on a non-dividend-paying stock before the expiration date.

B) It can be optimal to exercise an American put option on a non-dividend-paying stock early.

C) It can be optimal to exercise an American call option on a non-dividend-paying stock early.

D) It is never optimal to exercise an American put option on a non-dividend-paying stock before the expiration date.

1)False ,It is created using 4 put options .

2)correct option is "B" -It can be optimal to exercise an American put option on a non-dividend-paying stock early.

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.