Suppose the S&P 500 is at ($889,) and a one-year European call option with a strike price
Question:
Suppose the S&P 500 is at \($889,\) and a one-year European call option with a strike price of \($429\) has a negative time value. If the interest rate is 6%, what can you conclude about the dividend yield of the S&P 500? (Assume all dividends are paid at the end of the year.)
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Step by Step Answer:
To understand the relationship between the negative time value of the European call option and the dividend yield of the SP 500 lets break down the co...View the full answer
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