For a dividend-paying stock, the tree for the stock price does not recombine; but the tree for

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"For a dividend-paying stock, the tree for the stock price does not recombine; but the tree for the stock price less the present value of future dividends does recombine." Explain this statement.

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Options Futures and Other Derivatives

ISBN: 978-0134472089

10th edition

Authors: John C. Hull

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Question Posted: Feb 12, 2018 12:21 PM

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For a dividend-paying stock, the tree for the stock price does not recombine; but the tree for

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Suppose a dividend equal to is paid during a certain time interval If is the st...View the full answer

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