Consider a binomial model for a stock that pays a random dividend at each node. Specifically:...

   

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Consider a binomial model for a stock that pays a random dividend at each node. Specifically: . The starting date is t = 0 and the final date is t = T. There is a bond with constant return equal to R in each period. Let with Bt = R, V0 t T, represent the price of the bond. Let R be the stochastic process representing the stock return, with - - Rt E {Ru, Ra}, VO < t initial value So at t = 0 and St (1-At)RtSt-1, VO St Bt' 515 e. Check whether the discounted stock price process, martingale under the risk-neutral probability measure Q. is a Consider a binomial model for a stock that pays a random dividend at each node. Specifically: . The starting date is t = 0 and the final date is t = T. There is a bond with constant return equal to R in each period. Let with Bt = R, V0 t T, represent the price of the bond. Let R be the stochastic process representing the stock return, with - - Rt E {Ru, Ra}, VO < t initial value So at t = 0 and St (1-At)RtSt-1, VO St Bt' 515 e. Check whether the discounted stock price process, martingale under the risk-neutral probability measure Q. is a