Consider a Two-Period Binomial Model,where Each Period Is 6 Months

question 5

Multiple Choice

Consider a two-period binomial model,where each period is 6 months.Assume the stock price is $75.00,σ = 0.35,and r = 0.05.An American call option with a strike price of $80 would be exercised early at what dividend yield?

• A) 5.0%
• B) 7.0%
• C) 9.0%
• D) Never exercise early

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Definitions:

Crowdfunders

Individuals who collectively invest or donate small amounts of money towards a project, product, or venture typically through an online platform.

Prizes

Awards or rewards given for a specific achievement or competition.

Patronage Model

A crowdfunding model where backers do not expect any direct return for their donation or investment.

Crowdfunders

Individuals or groups who fund projects or ventures through small contributions from a large number of people, typically via the internet.