Stock A has a price of €33. Assume that each semester the price of A price will...
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Stock A has a price of €33. Assume that each semester the price of A price will increase by 20% or decrease by 30%. Four quarters from now Firm A will pay a dividend equal to 10% of the stock price at that time. Consider an APR of 6,1% semi-annually compounded.
Estimate the value of a
European call option on stock A with one semester left to maturity and a strike
of €29.
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