Other things equal, which of these American options are you most likely to want to exercise early?
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Other things equal, which of these American options are you most likely to want to exercise early?
a. A put option on a stock with a large dividend or a call on the same stock.
b. A put option on a stock that is selling below exercise price or a call on the same stock.
c. A put option when the interest rate is high or the same put option when the interest rate is low.
Illustrate your answer with examples.
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