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The 2 questions I struggle with are the following: True or false? Please justify and explain your answer. 1. Since the theta of a European
The 2 questions I struggle with are the following:
True or false? Please justify and explain your answer.
1. Since the theta of a European call option on a non-dividend paying underlying stock is negative, the value of such an option is expected to decrease, on average, over time.
2. We cannot use a European option pricing formulas to price an American put option on a non-dividend-paying stock.
Thanks a lot in advance.
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