An Asian option is a term used to describe: choose one)
A) An option where the payoff depends on whether a barrier is hit
B) An option where the payoff depends on the average value of a variable over a period of time
C) An option that trades on an exchange in the Far East
D) An option with a non-standard payoff

Question

Quizplus · Accepted Answer

An Asian option's payoff depends on the average value of the underlying asset over a certain period of time, rather than its value at maturity alone. This averaging feature is used to mitigate the risk of market manipulation of the underlying asset at maturity.

An Asian Option Is a Term Used to Describe: Choose