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

Question 5

Multiple Choice

Consider a two-period binomial model,where each period is 6 months.Assume the stock price is $75.00,σ = 0.35,and r = 0.05.An American call option with a strike price of $80 would be exercised early at what dividend yield?


A) 5.0%
B) 7.0%
C) 9.0%
D) Never exercise early

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