20. Other things equal, which of these American options are you most likely to want to exercise...

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20. 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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Principles Of Corporate Finance

ISBN: 9780071314176

10th Global Edition

Authors: Richard Brealey

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