In the Case of Look Back Option

question 25

Multiple Choice

In the case of look back option:

• A) the option holder must decide before maturity whether the option is a call or a put.
• B) the option holder chooses as the exercise price any of the asset prices that occurred before the final date.
• C) the option payoff is zero if the asset price is on the wrong side of the exercise price and otherwise is a fixed sum.
• D) the exercise price is equal to the average of the asset's price during the life of the option.

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Definitions:

Mechanistic Designs

Organizational structures characterized by rigid hierarchies, clear job responsibilities, and a focus on efficiency and predictability.

Mechanistic Organizations

Highly structured, hierarchical companies with centralized decision-making and strict rules and procedures.

Centralized Organizations

Organizations where decision-making authority is concentrated at higher levels of management, leading to a more controlled and uniform operational approach.

Decentralized Organizations

Organizations where the decision-making authority is distributed among various levels rather than being concentrated at a single point.