An option is said to be path-dependent if
A) It has a payoff that depends in some way on the path of prices taken by the underlying.
B) It can only be priced on a non-recombining tree.
C) Different paths of the asset price necessarily lead to different payoffs.
D) All of the above.

Question

Quizplus · Accepted Answer

Path dependency refers to the fact that the payoff of the option depends on the path taken by the underlying asset's prices over time. Choices B and C are not necessarily true for all path-dependent options.

An Option Is Said to Be Path-Dependent If