
Explanation:
Using the standard lookback payoff formulas:
With the given path:
$76.55 - 23.58 = 52.97$$89.55 - 76.55 = 13.00$$89.55 - 30.00 = 59.55$$30.00 - 23.58 = 6.42$The highest payoff is from the fixed lookback call.
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Q-731.2. Consider the price of an asset that begins at $30.00 and ends, after 20 periods, higher at $76.55. During this 20-period life, its maximum ($89.55) and minimum price ($23.58) are also highlighted:
Among the following choices, which lookback option has the HIGHEST payoff if its life matches the 20-period interval shown?
A
Floating lookback call
B
Floating lookback put
C
Fixed lookback call with strike = $30.00 (matching the initial asset price)
D
Fixed lookback put with strike = $30.00 (matching the initial asset price)