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= A one-year American call option on a stock has a strike price of $40. Suppose p= 0.05 and 0 = 0.4. The stock will
= A one-year American call option on a stock has a strike price of $40. Suppose p= 0.05 and 0 = 0.4. The stock will pay a dividend of $2 at the end of 6 months. o If its price is $39 after paying dividend. Is it optimal to early exercise the option just before the dividend payment? Explain your answer with details
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