Question: Consider a two-period binomial model with S = 100, u = 1.10, d = 0.90, R = 1.02. Suppose also that a dividend of $4

Consider a two-period binomial model with S = 100, u = 1.10, d = 0.90, R = 1.02. Suppose also that a dividend of $4 is expected after one period. What is the early-exercise premium of a two-period American call option with a strike price of K = 100?

a. $ 3.12

b. $ 2.12

c. $ 0.14

d. $ 0.00

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