15) American Options Flashcards
(6 cards)
1
Q
How does the early exercise feature affect the valuation of an American put option
A
2
Q
Why is pricing an American put option a free boundary problem, and how does the Black-Scholes equation change
A
3
Q
Why does the Black-Scholes PDE become an inequality when pricing American options
A
4
Q
What boundary conditions are used when pricing an American put option
A
5
Q
What is the smooth pasting condition in American put option pricing
A
6
Q
What is the price of an American call option on a non-dividend paying stock
A
