单选题

Compared to European put options on an asset with no cash flows, an American put option（）。

A、 will have a higher, lower bound on its price.
B、 will have a lower, lower bound on its price.
C、 will have the same lower bound on its price.

【正确答案】 A

【答案解析】

Early exercise of an in-the-money American put option on an asset with no cash flows can generate more, X-S, than the minimum value of the European option, X/(1+R)T- S. The possibility of profitable early exercise leads to a higher, lower bound on the price of the American put option.