Question
Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $60.00, = 0.30, r = 0.05. An American put
Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $60.00, = 0.30, r = 0.05. An American put option with a strike price of $65 would be exercised early at what dividend yield?
(a)5.0 %
(b)6.0 %
(c)11.0 %
(d)Never exercised early
Answer: D
Can you explain why the answer is D?
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Entrepreneurial Finance
Authors: J. Chris Leach, Ronald W. Melicher
6th edition
1305968352, 978-1337635653, 978-1305968356
