Which one of the following statements is NOT true concerning Asian options?

1) Asian options refer to those predominately traded in Asian markets much in the same way as American options dominate the option exchanges in the U.S.

2) The Black-Scholes-Merton model does not apply to Asian options because the payoff structure under Asian options is different from that under European options

3) The method of Monte Carlo simulations provides a great way of pricing Asian options because the payoffs for Asian options on the terminal date depend on the full path of underlying stock prices

4) The method of binomial trees would be difficult to price Asian options given their path-dependent nature

2. Which one of the following statements is NOT true concerning the total asset growth anomaly?

1) The total asset growth anomaly refers to the empirical finding that firms with high growth rate in total assets tend to experience high future stock returns

2) One possible explanation for the total asset growth anomaly is that there exist limits to arbitrage preventing the mispricing from being arbitraged away

3) Corporate executives who engage in expanding the firm total assets through mergers and acquisitions tend to waste resources and thus cause poor performance in subsequent stock returns

4) To exploit the total asset growth anomaly one may buy call options on stocks with low asset growth in the recent past and buy put options on stocks with high asset growth in the recent past