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please help.. how to solve this accounting for the divedend! Exercise 1.3-Binomial Model Consider the following economic inputs: S=100;K=100;Rf=3%;=20%; T=2 Year Semi-annual time steps (4
please help.. how to solve this accounting for the divedend!
Exercise 1.3-Binomial Model Consider the following economic inputs: S=100;K=100;Rf=3%;=20%; T=2 Year Semi-annual time steps (4 Time Steps) $2 Dividend paid in 6 months if S>100 $2.50 Dividend paid in 18 months if S>100 Calculate the following: - European and American Value of a Put option? - Options sensitivity to a 10% change in the stock, S=110 ? - Options sensitivity to a 10% change in the risk-free rate Rf= 3.30% ? Next change the option type to the following. Put option that is knocked-out if the stock price rises above 130 or if the stock price falls below 70 . - Calculate the American and European valuesStep by Step Solution
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