Financial Statement Analysis
Barrier options are a type of exotic option where the payoff depends on whether the underlying asset's price reaches a predetermined barrier level. These options can be classified as 'knock-in' options, which come into existence when the barrier is breached, or 'knock-out' options, which become void if the barrier is breached. The unique nature of barrier options makes them sensitive to the underlying asset's price movements, leading to different pricing models compared to standard options.
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