Suppose that S1 and S2 follow geometric Brownian motion and pay continuous proportional dividends at the rates
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where σ2 = σ21 + σ22 ˆ’ 2Ï1, 2σ1σ2 and δ1 and δ2 are the dividend yields on the two stocks.
DividendA dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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