Consider an american call option on a stock the time to, Financial Management

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Consider an american call option on a stock the time to

Consider an American call option on a stock. The time to maturity is 18 months, the risk-free interest rate is 2% and the exercise price is 50$. The underlying stock will pay dividend D1 in 4 months and dividend D2 10 months. Find the maximum values of D1 and D2 such as the option will not be exercised on either of the two dividend dates.

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Financial Management: Consider an american call option on a stock the time to

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