In a Barrier Option

question 16

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.

---

Definitions:

Eye Blink

A rapid closing and opening of the eyelid which is a reflex reaction to protect the eye from foreign bodies or bright lights and to lubricate the eyeball.

Unconditioned Reflex

An automatic response to a specific stimulus that does not require prior learning or conditioning to occur.

Stimulus

Any object, event, or environmental condition that can provoke a physiological or psychological response.

Response

Any behavior of a living organism that results from an external or internal stimulus.