The exercise value of a __________ option is determined by the maximum or minimum price of the underlying asset reached during the life of an option and the expiry price of the asset.

A) forward start
B) compound
C) barrier
D) look back

Question

The exercise value of a __________ option is determined by the maximum or minimum price of the underlying asset reached during the life of an option and the expiry price of the asset.

A) forward start
B) compound
C) barrier
D) look back

Quizplus · Accepted Answer

The exercise value of look back options is determined by the maximum or minimum price of the underlying asset reached during the life of an option and the expiry price of the asset.A look back call option pays the maximum of either the expiry price less the minimum price reached or zero at expiry.A look back put option pays either the maximum price reached less the expiry price or zero at expiry.

The Exercise Value of a __________ Option Is Determined by the Maximum