Consider an American call option on a stock, with a $56 strike and 1-year to expiration. The stock has a continuous dividend yield of 10%, and its current price is $66. Suppose the volatility of the stock is 14%. The continuously compounded risk-free interest rate is 7%. Use a three-period binomial tree to calculate the following: (a) The payoff at time 2: Up movement. (b) The payoff at time 2: Middle movement. (c) The payoff at time 2: Down movement. (d) The payoff at time 1: Up movement. (e) The payoff at time 1: Down movement. (f) The option cost at time 0. (A) 21.04 (B) 19.04 (C) 22.04 (D) 20.04 (E) 18.04 Problem #5(a): Select v 1 Part (a) choices. (A) 7.69 (B) 4.69 (C) 6.69 (D) 5.69 (E) 8.69 Problem #5(b): Select 1 Part (b) choices. (A) 3.44 (B) 4.44 (C) 2.44 (D) 1.44 (E) 5.44 Problem #5(c): Select v 1 Part (C) choices. (A) 11.84 (B) 10.84 (C) 12.84 (D) 13.84 (E) 14.84 Problem #5(d): Select v Part (d) choices. (A) 6.81 (B) 5.81 (C) 3.81 (D) 4.81 (E) 7.81 Problem #5(e): Select v Part (e) choices. (A) 11.00 (B) 7.00 (C) 10.00 (D) 8.00 (E) 9.00 Problem #5(f): Select v 1 Part (f) choices. Save Consider an American call option on a stock, with a $56 strike and 1-year to expiration. The stock has a continuous dividend yield of 10%, and its current price is $66. Suppose the volatility of the stock is 14%. The continuously compounded risk-free interest rate is 7%. Use a three-period binomial tree to calculate the following: (a) The payoff at time 2: Up movement. (b) The payoff at time 2: Middle movement. (c) The payoff at time 2: Down movement. (d) The payoff at time 1: Up movement. (e) The payoff at time 1: Down movement. (f) The option cost at time 0. (A) 21.04 (B) 19.04 (C) 22.04 (D) 20.04 (E) 18.04 Problem #5(a): Select v 1 Part (a) choices. (A) 7.69 (B) 4.69 (C) 6.69 (D) 5.69 (E) 8.69 Problem #5(b): Select 1 Part (b) choices. (A) 3.44 (B) 4.44 (C) 2.44 (D) 1.44 (E) 5.44 Problem #5(c): Select v 1 Part (C) choices. (A) 11.84 (B) 10.84 (C) 12.84 (D) 13.84 (E) 14.84 Problem #5(d): Select v Part (d) choices. (A) 6.81 (B) 5.81 (C) 3.81 (D) 4.81 (E) 7.81 Problem #5(e): Select v Part (e) choices. (A) 11.00 (B) 7.00 (C) 10.00 (D) 8.00 (E) 9.00 Problem #5(f): Select v 1 Part (f) choices. Save