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An American call option on a stock has a strike price of $40 and expires in one year. The risk-free rate is 5%. Volatility is
An American call option on a stock has a strike price of $40 and expires in one year. The risk-free rate is 5%. Volatility is 40%. A dividend of $0.1 is payable at the end of today, and another dividend of $1 is payable in 6 months. The ex-dividend stock price is $39.5 after 6 months. What is the decision of a rational investor? An American call option on a stock has a strike price of $40 and expires in one year. The risk-free rate is 5%. Volatility is 40%. A dividend of $0.1 is payable at the end of today, and another dividend of $1 is payable in 6 months. The ex-dividend stock price is $39.5 after 6 months. What is the decision of a rational investor
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