A stock that pays a 1 dividend is currently trading at 40, Ask an Expert

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A stock that pays a 1% dividend is currently trading at $40. What is the borrowing amount (B) on the 1-year call option with strike price of $40 if the volatility of the underlying stock is 20% and the continuous risk-free rate is 4%? Assume three (3) binomial periods for this 1-year call option. Round your answer to the hundredth decimal place e.g. 1.12.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91610745

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