A European option on a stock with a known dollar dividend is valued by setting the stock price variable equal to the stock price minus the present value of the dividend in the Black-Scholes-Merton formula
A second price can be obtained using the tree building procedure in the chapter. Which of the following is true when a very large number of time steps are used in the tree?
A. The first price is higher than the second price
B. The first price is lower than the second price
C. The first price is sometimes higher and sometimes lower than the second price
D. The two prices are almost exactly the same
D
The two prices are exactly the same because they are based on treating dividends in the same way.
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In applying LIFO to the retail method, we assume that the retail prices of goods remained _____ during the period.
Fill in the blank(s) with the appropriate word(s).
A broker may be entitled to a commission in the event that the sale does not close if the problem was caused by the
a. Seller. b. Buyer. c. Bank. d. Title Company.