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Use the binomial tree technique to price an 8 month American call option with strike price $88, written on a $92 stock. Use a
Use the binomial tree technique to price an 8 month American call option with strike price $88, written on a $92 stock. Use a two step tree, with four month time steps. Volatility is 28%. The stock will pay a dividend in six months time of $5. Interest rates are 0.3%, with continuous compounding.
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