hard · Quantitative Finance

In the Heston characteristic function approach, why is Fourier inversion preferred over standard Monte Carlo for pricing vanilla European options?

1. It automatically satisfies the Feller condition without parameter constraints.
2. Monte Carlo cannot handle the correlation ρ between asset and volatility.
3. Fourier inversion provides an exact solution for American-style early exercise.
4. It is computationally much faster and provides higher precision.

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