The average value the stock price

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Question

You hold a Asian Put option on an underlying stock with payoff max(K-S_{average}, 0) where S_{average} is the average value the stock price takes over the option's maturity. The option's maturity is equal to 6 months. Right after you buy the option, the CEO of the stock's company announces a dividend payment of 5$ per stock in 2 months from now. How does the dividend payment affect your Asian Put option price and why?

Reference no: EM133629978

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