Question: Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $60.00, = 0.30, r = 0.05. An American put

Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $60.00, = 0.30, r = 0.05. An American put option with a strike price of $65 would be exercised early at what dividend yield?

(a)5.0 %

(b)6.0 %

(d)Never exercised early

Answer: D

Can you explain why the answer is D?

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