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1. Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $50.00, sigma= 0.20, r = 0.06 and the

1. Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $50.00, sigma= 0.20, r = 0.06 and the dividend yield = 3.5%. What is the lowest strike price where early exercise would occur with an American put option? ANS: 60 SHOW DETAILS

2. What is the maximum approximate strike price where early exercise would occur with an American put option?

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