Monte Carlo simulation is not suitable for pricing options in which of the following situations?
A.  Cash-or-nothing call option (i.e., binary option) on SCU stock (payoff is fixed amount or nothing).
B.  A lookback put option on XYZ stock (payoff based on maximum or minimum stock price).
C.  An American call option on ABC stock (possible early exercise).
D.  An Asian option on a stock market index (payoff based on average stock price).
Answer:C
Monte Carlo simulation is suitable for pricing options in each case except when early exercise of the option is possible. This means that the Monte Carlo approach could not accurately price the American call option. Monte Carlo simulation is very useful for options with price-dependent paths (such as Asian options and lookback options) and can also handle options with complex payoff, such as binary options.