Which of the following statements is true of the value of European (E) options, American (A) options, and Bermudan (B) options?
A) $A B E$
B) $A E B$
C) $E A B$
D) $B A E$

Question

Which of the following statements is true of the value of European (E) options, American (A) options, and Bermudan (B) options?
A) $A > B > E$
B) $A > E > B$
C) $E > A > B$
D) $B > A > E$

Quizplus · Accepted Answer

American options, which can be exercised at any time before expiration, generally have the highest value. Bermudan options, which can be exercised on specific dates before expiration, have the next highest value. European options, which can only be exercised at expiration, typically have the lowest value.

Which of the Following Statements Is True of the Value A>B>EA > B > EA>B>E

Which of the Following Statements Is True of the Value $A > B > E$