Problem 2. Suppose now that you consider holding the stock from the previous problem for two years, and each year it either goes up by 30% or down by 20%. The company has already announced its dividend policy: it will pay a $15 dividend immediately before the stock price goes above $70. You hold an American call option with strike price K = $55, which expires in two years. You can exercise your option today, in one year from now, or in two years. Should you exercise the option early? (Hint: There is no shortcut for this problem. You have to do the work. Draw the stock payoff diagram, and make sure you factor in the $15 dividend payment when the value of the stock is larger than $70.) Problem 2. Suppose now that you consider holding the stock from the previous problem for two years, and each year it either goes up by 30% or down by 20%. The company has already announced its dividend policy: it will pay a $15 dividend immediately before the stock price goes above $70. You hold an American call option with strike price K = $55, which expires in two years. You can exercise your option today, in one year from now, or in two years. Should you exercise the option early? (Hint: There is no shortcut for this problem. You have to do the work. Draw the stock payoff diagram, and make sure you factor in the $15 dividend payment when the value of the stock is larger than $70.)