An Exotic Option Is

question 7

Multiple Choice

An exotic option is

• A)An option that is either A sian or Bermudan.
• B)An option that is unique and not widely traded.
• C)An option that is not a vanilla put or call.
• D)An option where there are more than two counterparties in the deal.

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Definitions:

U.S. Dollar

The official currency of the United States, widely used as a benchmark in global financial transactions.

Appreciates

Refers to an increase in value or price of an asset, currency, or commodity over time.

Purchasing Power Parity

A theory that states prices of goods and services should equalize across countries when expressed in a common currency, meaning a basket of goods should cost the same regardless of the country after accounting for exchange rates.

Big Mac

a hamburger sold by the international fast-food chain McDonald's, often used as a symbol of globalization and sometimes as a reference point in economic studies like the Big Mac Index.