What is difference between a european and an american option

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Reference no: EM131519551

1. A one-month European put option on a non-dividend-paying stock currently selling for S2.50. The stock price is $47, the strike price is $50, and the risk-free interest rate is 6% per annum. What opportunities are there for an arbitrageur?

2. What is the difference between a European and an American option? when would you exercise an American call option? When would you exercise an American put option?

Reference no: EM131519551

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