Give two reasons that the early exercise of an American call option on a non-dividend-paying stock is

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Give two reasons that the early exercise of an American call option on a non-dividend-paying stock is not optimal. The first reason should involve the time value of money. The second reason should apply even if interest rates are zero.

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Options Futures and Other Derivatives

ISBN: 978-0134472089

10th edition

Authors: John C. Hull

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Question Posted: Feb 12, 2018 11:12 AM

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Give two reasons that the early exercise of an American call option on a non-dividend-paying stock is

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Delaying exercise delays the payment of the strike price This means that the option holder is able ...View the full answer

Options Futures and Other Derivatives

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