Question: i. What is the difference between an American option and a European option? ii. Does the holder of an option have to exercise it? iii.

i. What is the difference between an American option and a European option?

ii. Does the holder of an option have to exercise it?

iii. Explain why the following statement is true or false.

A call seller is obliged to buy the underlying share at the exercise price.

iv. Explain how an increase in the strike price affect the value of put and call written on the stock.

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