The fact that American put values may not equal the price implied by put call parity is attributable to the possibility of what event?
A) Changes in the dividend
B) Early exercise
C) Interest rate declines
D) Interest rate rises

Question

Quizplus · Accepted Answer

American put options can be exercised early, which can affect their value and cause them to deviate from the price implied by put-call parity. The possibility of early exercise causes American put values to be higher than European put values. Changes in dividends and interest rates can also affect option prices, but they do not explain the specific deviation in American put values from put-call parity.

The Fact That American Put Values May Not Equal the Price