What Is the Payoff on a 75 Strike Asian Option

question 16

Multiple Choice

What is the payoff on a 75 strike Asian option given it is a geometric average price call? The recent prices are 72,76,74,78,and 78.

• A) 0.46
• B) 0.56
• C) 0.66
• D) 0.76

---

Definitions:

Cash Payback Period

The time it takes for an investment to generate an amount of cash inflows equal to the initial cost of the investment.

Net Cash Flows

The difference between cash inflows and cash outflows within a specified period, reflecting the total amount of cash being transferred into and out of a business.

Estimated Cost

A projection or approximation of the cost associated with a particular project, product, or activity.

Cash Payback Period

The time it takes for an investment to generate enough cash flow to recoup the initial outlay.