Which of the Following Is the Payoff from an Average

question 18

Multiple Choice

Which of the following is the payoff from an average strike put option?

• A) The excess of the strike price over the average stock price, if positive
• B) The excess of the final stock price over the average stock price, if positive
• C) The excess of the average stock price over the strike price, if positive
• D) The excess of the average stock price over the final stock price, if positive

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Definitions:

Due Diligence

An investigation or exercise of care that a reasonable business or person is expected to take before entering into an agreement or transaction with another party.

Business Decision

A judgment or choice made in the context of managing a company, often involving resource allocation and strategy.

Pooling Agreement

An agreement made by shareholders whereby they promise to vote the same way on a particular issue. Also called shareholder agreements and voting agreements.

Breach of Contract

The failure of one party to fulfill any of its contractual obligations without a valid legal reason, leading to possible legal action by the other party.