Assume that the stock in Problem 13.29 is due to go ex-dividend in 1 months. The expected
Question:
Assume that the stock in Problem 13.29 is due to go ex-dividend in 1 months. The expected dividend is 50 cents.
(a) What is the price of the option if it is a European call?
(b) What is the price of the option if it is a European put?
(c) If the option is an American call, are there any circumstances under which it will be exercised early?
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