(a) Price the option in Problem 7 if the company has announced it will give a $0.66...
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(a) Price the option in Problem 7 if the company has announced it will give a $0.66 per share dividend in 7 days.
(b) Same question except the option is an index fund whose dividend yield is 7.3 %.
Data in Problem 7
Use a 4-step binomial tree to price a call option with these particulars: S0 = 36, K = 34, r = 0.02, σ = 0.3, T = 4 weeks (28 days).
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a Pricing a call option on a dividendpaying stock using a binomial tree To price a call option on a dividendpaying stock using a binomial tree we need ...View the full answer
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