Question: Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $75.00, = 0.35, and r = 0.05. An American

Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $75.00, = 0.35, and r = 0.05. An American call option with a strike price of $80 would be exercised early at what dividend yield? (a) 5.0 % (b) 7.0 % (c) 9.0 % (d) Never exercise early Answer: D

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