Question For a stock, you are given: i. The current stock price is 90 ii. The stock pays dividends continuously at a rate proportional to its price. The dividend yield is 2% iii. The stock' s volatility is 20% iv. You use a three-period forward binominal tree to model the movement of the stock price. The length of each period is 3 months You are also given that the continuously compounded risk-free rate is 10% Consider a 9-month 90-strike American put on the stock, calculate the risk-neutral probability that option will be exercised before maturity. Possible Answers A 0.1447 B 0.2756 C 0.3928 D 0.5249 E 0.7244 Question For a stock, you are given: i. The current stock price is 90 ii. The stock pays dividends continuously at a rate proportional to its price. The dividend yield is 2% iii. The stock' s volatility is 20% iv. You use a three-period forward binominal tree to model the movement of the stock price. The length of each period is 3 months You are also given that the continuously compounded risk-free rate is 10% Consider a 9-month 90-strike American put on the stock, calculate the risk-neutral probability that option will be exercised before maturity. Possible Answers A 0.1447 B 0.2756 C 0.3928 D 0.5249 E 0.7244