When growth rate $($dividend yield$)$ increases with all else remaining the same, which of the following is true?

Both calls and puts increase in value.

Calls increase in value while puts decrease in value.

Both calls and puts decrease in value

Puts increase in value while calls decrease in value.

Question at position $7$

$7$

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Multiple Choice$$

$4$ points$$

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Question at position $7$

A tree is constructed to value an option on an index that is currently worth $100$ and has a volatility of $25\%.$ The index provides a dividend yield of $2\%.$ Another tree is constructed to value an option on a non$-$dividend$-$paying stock that is currently worth $100$ and has a volatility of $25\%.$

A tree is constructed to value an option on an index that is currently worth $100$ and has a volatility of $25\%.$ The index provides a dividend yield of $2\%.$ Another tree is constructed to value an option on a non$-$dividend$-$paying stock that is currently worth $100$ and has a volatility of $25\%.$

Can not determine.

The parameter p is the same for both trees but u is not

The parameters p and u are the same for both trees.

The parameter u is the same for both trees but p is not.