Barrier options have payoffs that
A) have payoffs that only depend on the minimum price of the underlying asset during the life of the option.
B) depend both on the asset's price at expiration and on whether the underlying asset's price has crossed through some barrier.
C) are known in advance.
D) have payoffs that only depend on the maximum price of the underlying asset during the life of the option. Barrier options have payoffs that depend both on the asset's price at expiration and on whether the underlying asset's price has crossed through some barrier.

Question

Quizplus · Accepted Answer

Barrier options have payoffs that depend both on the asset's price at expiration and on whether the underlying asset's price has crossed through some barrier. The other answer choices are incorrect as they describe payoffs that depend only on the minimum or maximum price of the underlying asset during the life of the option, or whether or not the payoffs are known in advance.

Barrier Options Have Payoffs That