Explanation:
False. Even with an initial lockout or vesting restriction, the option still retains some additional value from the possibility of early exercise once the restriction ends. Therefore, it should still be worth more than its European-style counterpart, not less.
Ultimate access to all questions.
Q-11(c). For each of the following, is the answer true or false?
True or false: A nonstandard American option with an initial lockout (“vesting restrictions”) ought to be worth less than its European style analog
A
True
B
False
No comments yet.