Problem 4 Consider a stock with current price $60. You are given: Dividends of $1 each...
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Problem 4 Consider a stock with current price $60. You are given: Dividends of $1 each will be paid every three months; the next dividend will be paid in 2 months. = 0.3. The continuously compounded risk-free interest rate is 4%. Use the Black-Scholes methodology to price a nine-month at-the-money European put option on the stock. Problem 4 Consider a stock with current price $60. You are given: Dividends of $1 each will be paid every three months; the next dividend will be paid in 2 months. = 0.3. The continuously compounded risk-free interest rate is 4%. Use the Black-Scholes methodology to price a nine-month at-the-money European put option on the stock.
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