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.

Distinguish between mutually exclusive and non-exclusive events.

Understand and describe properties of the binomial distribution.

Describe the characteristics of the probability density function.

Apply the concepts of expected value and variance in probability distributions.

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Definitions:

Right

Entitlements or freedoms that individuals are allowed by law or moral principles.

Emmanuel Kant

A German philosopher who profoundly influenced modern philosophy with his works on ethics, aesthetics, and epistemology, particularly known for his theory of the moral imperative.

Absolute Rules

Laws or principles that are seen as universally true and not subject to change or exception.

Intuitive Understanding

An immediate grasp or recognition of patterns and principles without reliance on conscious reasoning.