When Is an Asian Option Less Useful Than a Vanilla

question 17

Multiple Choice

When is an Asian option less useful than a vanilla option?

• A)For reducing the incentives for price manipulation of the underlying close to maturity.
• B)For making the option less sensitive to jump risk close to maturity.
• C)For hedging exposure to the average price of a security.
• D)For taking directional bets.

---

Definitions:

Interest

The charge for borrowing money, typically expressed as an annual percentage of the loan amount, or the income earned from lending money.

Account

A record or statement that tracks financial transactions and the financial position of an individual, company, or other entity.

Balance

The equilibrium state where different elements are in the correct proportions or positions to create harmony or stability.

Immediate Payment

A payment method where the transaction is settled instantly or without any significant delay.