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Compound Average Rate Option


An option which gives it holder the right, without the obligation, to buy a currency average rate option / ARO (call or put). It is compound in the sense that it enables the holder to buy another option, i.e., the currency ARO. This option provides risk protection through the second option against currency fluctuations.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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