Lookback options have payoffs that
A)depend in part on the minimum or maximum price of the underlying asset during the life of the option.
B)only depend on the minimum price of the underlying asset during the life of the option.
C)only depend on the maximum price of the underlying asset during the life of the option.
D)are known in advance.

Question

Quizplus · Accepted Answer

Lookback options have payoffs that depend on the minimum or maximum price of the underlying asset during the life of the option. The payoff is based on the difference between the minimum or maximum price and the strike price. Therefore, the correct choice is A.

Lookback Options Have Payoffs That