Question
You are given the following information about Southwest Airlines (LUV) stock. The current stock price is $80. Southwest Airlines' dividend rate is 1.00% per year
You are given the following information about Southwest Airlines (LUV) stock.
The current stock price is $80.
Southwest Airlines' dividend rate is 1.00% per year compounded continuously
The annual volatility of the stock price, , is 0.50.
The risk free interest rate is 6.00%.
Using a 2 period binomial tree, evaluate the LUV American Style Put option premium with a strike price of $85 and 6 months until expiration.
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Multinational financial management
Authors: Alan c. Shapiro
10th edition
9781118801161, 1118572386, 1118801164, 978-1118572382
