Which of the following are not path-dependent options when the stock pays a constant dividend yield?
A)European calls and European puts
B)European calls and American puts
C)American puts and European puts
D)American puts and European calls
E)none of the above

Question

Quizplus · Accepted Answer

When the stock pays a constant dividend yield, European calls and European puts are not path-dependent options because the dividend yield is already priced into the underlying stock. This means that the option's value does not depend on the path the stock takes to reach its current price, but only on the current price and other market factors such as volatility and interest rates. American puts and European calls, on the other hand, are path-dependent because the option holder has the right to exercise the option early, potentially missing out on future stock price movements and dividend payouts. American puts also have path-dependence because the holder can choose when to exercise the option, which affects the final payoff. European puts are also path-dependent because they depend on the price of the underlying stock at maturity.

Which of the Following Are Not Path-Dependent Options When the Stock