A Shout Option

question 21

Multiple Choice

A shout option

• A) Is like a barrier option but in which the option holder gets to choose a barrier at any point.
• B) Is effectively an American option which can be exercised at any time before maturity.
• C) Is an option where you can lock-in "early-exercise" profits at any one point and receive, at maturity, the maximum of these locked-in profits or the moneyness of the option at maturity.
• D) Is a Bermudan option with only one specified early-exercise date, that is, it can be exercised early on that given date or at maturity.

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Definitions:

Government Intervention

Actions taken by a government to influence its economy, which can include regulations, subsidies, and tariffs.

Market Economy

An economic system where supply and demand from private enterprises and consumers dictate the production of goods and services.

Invisible Hand

A term coined by Adam Smith to describe the self-regulating nature of the marketplace where individuals pursuing their own interest inadvertently benefit society at large.

Government Policies

Measures and regulations implemented by a government to influence economic, social, or administrative outcomes in the country.