Use the binomial tree technique to price a one year American call option with strike price $65,

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Use the binomial tree technique to price a one year American call option with strike price $65, written on a $60 stock.

Use a two step tree, with 6 month time steps. Volatility is 18%. The stock will pay a dividend in 7 months time of $4. Interest rates are 7%, with continuous compounding.

Related Book For answer-question

Corporate Finance A Focused Approach

ISBN: 978-1305637108

6th edition

Authors: Michael C. Ehrhardt, Eugene F. Brigham

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Posted Date: Oct 06, 2023 04:27 AM

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Use the binomial tree technique to price a one year American call option with strike price $65,

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To price a oneyear American call option using a binomial tree model we can follow these steps Step 1 ... View the full answer

Corporate Finance A Focused Approach

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