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Consider a Two-Period Binomial Model,where Each Period Is 6 Months

Question 17

Multiple Choice

Consider a two-period binomial model,where each period is 6 months.Assume the stock price is $46.00,σ = 0.28,r = 0.06 and the dividend yield is 2.0%.What is the maximum approximate strike price where early exercise would occur with an American call option?


A) $29
B) $33
C) $42
D) $46

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