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Explanation:
False. Although lookback options are designed to capture the most favorable price over the life of the option, they are not guaranteed to produce a positive gain in every case. Some lookback payoffs can still be zero, especially depending on the strike structure and the path of the underlying price.
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Q-17.1d. Are the following statements about lookback options TRUE or FALSE?
d) Due to the max/min function, a lookback can always be exercised for at least some gain
A
True
B
False