Consider Two Paths a and B for Stock Prices in a Barrier

question 18

Multiple Choice

Consider two paths A and B for stock prices in a barrier option setting that result in the same terminal price. Paths A and B will have different payoff consequences for the barrier option if

• A) Path A crossed the barrier before maturity while Path B did not.
• B) Both paths crossed the barrier prior to maturity but Path A re-crossed it while Path B did not.
• C) Neither path crossed the barrier prior to maturity.
• D) All of the above.