Question $1$

i$.$ Develop equity call and put valuation R functions for European options

that incorporate the payment of dividends. Ensure that your R functions

are suitably $($not overly$)$ documented using # statements. Explain in detail

what your functions do and any assumptions you have made.

ii$.$ Use two or three examples to show that your option valuations are sensible$.$

Such examples might come from textbooks, academic papers, newspapers

$($such as the Financial Times$)$ and$/$or the Bloomberg Terminal.

iii. What effect does the payment of dividends have on the price of a calls and

puts from the point of view of an option buyer?

Could you please explain the answers in detail using examples?