thisisbrianly

ov25 Wrote:
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> I understand RFR is required for computing
> American from European style options, but given no
> reference, how would you know which was asked in
> the question?

I am sure there would not be ambiguity in the exams question.

> Is it that payoff is different from the value of
> the option in which case we would use RFR to
> compute the value?

Payoff is same as value. Profit is not same as value. Be clear to distinguish between payoff diagrams and profit/loss diagrams as well.