Suppose the stock discussed above pays dividends. Assume all parameters are the same. Consider these three forms

Question:

Suppose the stock discussed above pays dividends. Assume all parameters are the same. Consider these three forms of dividends paid by the firm and in each case determine if the option will be exercised early.
(a) The stock pays a continuous, known stream of dividends at a rate of 4% per time.
(b) The stock pays 5% of the value of the stock at the third node. No other dividends are paid.
(c) The stock pays a $5 at the third node. Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...