A Firm has a stock price of 65 and an annual standard deviation of 25%. The risk-free rate is 10% (c.c.). This firm will pay a dividend of $8 in exactly 3 months and no other dividends over the next year. Price an American call written on this stock with an exercise price of $70 and a time to maturity of one year.

Answer rating: 100% (QA)

Stock Price is 65 Annual Standard deviation is 25 Risk free rate is 10CC ... View the full answer