Answer: A hedger with a series of fluctuating forward input costs

### Correct answer: **B** Asian options are most useful when the buyer wants to hedge or reduce the effect of **price fluctuations over time**. - A **hedger with a series of fluctuating forward input costs** benefits from averaging, because the payoff is tied to an average price rather than a single spot price at maturity. - They are **less desirable for speculators** because averaging reduces the chance of extreme payoffs. - They are also less appropriate for a **single lump-sum cost**, where a standard vanilla option may be more suitable. - A short would not generally want to buy a more expensive structure to increase premium unless there is some specific risk management objective. Therefore, the most likely desirable use is **B**.

Author: Manit Arora