Answer-first summary for fast verification
Answer: False
**Correct answer: False** Compound options are **not limited to numerical/binomial methods**. While binomial or other numerical methods can be used, some compound options can also be valued with **analytical closed-form methods** under specific assumptions. A classic example is the **Geske formula** for certain compound options. So the statement is too absolute because it says the option *must* be valued numerically rather than analytically.
Author: Manit Arora
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Q-13.1. P2.T5.13. Compound options. In regard to compound options is each the following TRUE or FALSE? A compound option must be valued with a binomial “simulation” (numerical) method rather than an analytical-type method.
A
True
B
False
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