medium · Quantitative Finance

What is a primary disadvantage of using the control variate technique in complex derivative pricing?

1. It always increases the computational time per path by an order of magnitude.
2. It cannot be combined with other variance reduction techniques like antithetic variates.
3. It introduces significant bias if the sample size is small.
4. It requires an additional analytic solution for the control variate, which may not exist for all products.

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