Asked by Marcos Colon on May 22, 2024
Verified
Trading in "exotic options" takes place primarily
A) on the New York Stock Exchange.
B) in the over-the-counter market.
C) on the American Stock Exchange.
D) in the primary marketplace.
E) None of the options.
Exotic Options
Non-standard options that have more complex features than common American or European options, often including different pay-off structures or the ability to trade on more unusual underlying assets.
Over-The-Counter Market
A decentralized market, without a central physical location, where participants trade securities directly between two parties.
New York Stock Exchange
A leading global securities exchange where stocks, bonds, and other financial instruments are bought and sold, based in New York City.
- Identify the differences between "traditional" and "exotic" options and their corresponding trading platforms.
Verified Answer
BS
Brandon SpenceMay 22, 2024
Final Answer :
B
Explanation :
Exotic options are primarily traded in the over-the-counter (OTC) market rather than on formal exchanges. This is because they are complex financial instruments that are customized to meet specific needs of the parties involved, which makes them less standardized and not suitable for trading on traditional exchanges.
Learning Objectives
- Identify the differences between "traditional" and "exotic" options and their corresponding trading platforms.