Solution-Determine if the option will he exercised early

Determine if the option will he exercised early

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Suppose the stock discussed above pays dividends. Assume all parameters are the same. Consider these three forms of dividends paid by the firm.
(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 dividend at the third node.
In each case determine if the option will he exercised early.

Reference no: EM131105335

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Determine if the option will he exercised early

Reference no: EM131105335

Reference no: EM131105335

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