Question: Consider an option that pays off the amount by which the final stock price exceeds the average stock price achieved during the life of the

Consider an option that pays off the amount by which the final stock price exceeds the average stock price achieved during the life of the option. Can this be valued from a binomial tree using backwards induction?

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No This is an example of a pathdependent option The payoff depends on the path followed ... View full answer

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