Problem $4.$ The payoff of a digital option with strike at $K$ is:

a$.$ max$\{S_T-K,0\},$ where $S_T$ is the stock price at expiration

b$.1if{S}_T-K0$

$0if{S}_T-K<mn\; id="EditorElement\_600612">0</mn>$

c$.S_T-K$

Please explain your answer.