Why is given value irrelevant for an american put

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Call prices are directly related to the stock's volatility, yet higher volatility means that the stock price can go lower. How would you resolve this apparent paradox?

The value Max[0, X(1 + r)-T - S0] was shown to be the lowest possible value of a European put. Why is this value irrelevant for an American put?

Reference no: EM131326120

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