Financial Risk Manager Part 1

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Explanation:

Correct answer: C

Under otherwise identical conditions, the typical price ordering for call options is:

Vanilla call < Shout call < Lookback call

A vanilla call has the least flexibility.
A shout call gives the holder some ability to lock in a favorable level.
A lookback call is most valuable because it effectively lets the holder choose the most favorable underlying price over the life of the option.

Therefore, the most likely relationship is Vanilla call < Shout < Lookback.

Explanation:

Correct answer: C

Under otherwise identical conditions, the typical price ordering for call options is:

Vanilla call < Shout call < Lookback call

A vanilla call has the least flexibility.
A shout call gives the holder some ability to lock in a favorable level.
A lookback call is most valuable because it effectively lets the holder choose the most favorable underlying price over the life of the option.

Therefore, the most likely relationship is Vanilla call < Shout < Lookback.

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MManit

Last updated: April 18, 2026 at 11:32

Shout < Vanilla call < Lookback (i.e., shout less expensive than regular call is less expensive than lookback)

36.4%

Lookback < Shout < Vanilla call

27.3%

Vanilla call < Shout < Lookback

27.3%

Vanilla call < Lookback < Shout

9.1%