When Is an Asian Option Less Useful Than a Vanilla

question 7

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.

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Definitions:

Behavioral Control

The regulation of one's actions and responses, especially in adapting to societal norms and coping with impulses.

Therapeutic Value

The health benefits or healing effects provided by a particular treatment or intervention.

Catharsis

A process of releasing and thereby providing relief from strong or repressed emotions.

Hypnosis

A state akin to trance characterized by focused concentration, diminished awareness of surroundings, and increased openness to suggestion.