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Explain why the Monte Carlo simulation approach cannot easily be used for Americanstyle
Chapter 21, Problem 21.9(choose chapter or problem)
QUESTION:
Explain why the Monte Carlo simulation approach cannot easily be used for Americanstyle derivatives.
Questions & Answers
QUESTION:
Explain why the Monte Carlo simulation approach cannot easily be used for Americanstyle derivatives.
ANSWER:Step 1 of 3
An American-style option is a type of options agreement that allows investors to execute their option rights anywhere before a period expiry date. It differs from some other type of option known as the European option, which only allows execution on the expiry date.