In a Barrier Option

question 27

Multiple Choice

In a barrier option,

• A)Price paths are bounced off the barrier.
• B)Option payoffs are conditional on whether the underlying breached the barrier during the option's life.
• C)Option payoffs are conditional on when the underlying breached the barrier during the option's life.
• D)Conditional on the barrier being breached during the option's life,option payoffs differ based on how many times the barrier was breached.

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Definitions:

Direct Labour Efficiency Variance

The difference between the expected hours to produce a specific number of units and the actual hours used.

Direct Material Used

Direct material used involves the consumption of raw materials that are transformed into and directly identifiable with the finished product in the manufacturing process.

Variable Manuf. Overhead

Variable manufacturing overhead refers to the indirect costs that change with the level of production, such as utilities for the manufacturing plant.

Labour Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain number of units, valued at the standard labor rate.