For Asian Options

question 52

Multiple Choice

For Asian options,

• A)the option is exercisable on discrete dates before maturity.
• B)the option holder chooses as the exercise price any of the asset prices that occurred before the final date.
• C)the option payoff is zero if the asset price is on the wrong side of the exercise price and otherwise is a fixed sum.
• D)the exercise price is equal to the average of the asset's price during the life of the option.

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Definitions:

Indifference Principle

If an asset is mobile, then in long-run equilibrium, the asset will be indifferent about where it is used; that is, it will make the same profit no matter where it goes.

Garbage Collector

An individual or entity responsible for collecting and disposing of waste material from public or designated areas.

Relatively Higher

A comparative term indicating that one variable or item is of greater magnitude or intensity compared to another or the general context.

Competitive Industry

An industry characterized by many sellers, where no single company can control market prices.