Which of the following cannot be valued by Monte Carlo simulation
A. European options
B. American options
C. Asian options (i.e., options on the average stock price)
D. An option which provides a payoff of $100 if the stock price is greater than the strike price at maturity
B
American options cannot be valued in a simple way using Monte Carlo simulation because Monte Carlo simulation works forward from the beginning of the life of an option and we do not know whether the option should be exercised when a particular time is reached.
You might also like to view...
A channel of distribution is defined as a group of individuals and organizations that
a) consumes about one-half of every dollar spent on products in the United States. b) directs the flow of products from producers to customers. c) links producers to other marketing intermediaries. d) takes title to products and resells them. e) manages transportation and warehousing functions.
Explain what happens in a SWOT analysis during the strategic planning process
What will be an ideal response?