A Cliquet Is Analogous to

question 31

Multiple Choice

A cliquet is analogous to

• A)A portfolio of vanilla options,all at-the-money today,and expiring on the reset dates of the cliquet.
• B)A portfolio of digital options,with one option coming to life at each reset date and expiring at the next reset date.
• C)A portfolio of forward-starts,with one option coming to life at each reset date and expiring at the next reset date.
• D)A portfolio of exchange options,with one option coming to life at each reset date and expiring at the next reset date.

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Definitions:

Varying Percent

Describes the difference in percentage rates, often used in finance and statistics, to compare changes over time or between different entities.

Experience Curve

A concept indicating that as a company gains experience in producing a product, its cost of production decreases due to efficiencies and learning effects.

Improve Its Experience Curve

Efforts to lower costs and improve efficiency as a company gains experience in production and operations.

Experience Curve Concept

The principle that the cost of production decreases as a company gains more experience in manufacturing a particular product, due to efficiencies and learning.