Consider an option on a dividend-paying stock when the, Financial Management

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Consider an option on a dividend-paying stock when the

Consider an option on a dividend-paying stock when the stock price is $30, the exercise price is $29, the risk-free interest rate is 5% per annum, the volatility is 25% per annum, and the time to maturity is four months. The present value of the dividend to be paid in 3 months is $1.

What is the price of the option if it is a European call?

What is the price of the option if it is an American call?

What is the price of the option if it is a European put?

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Financial Management: Consider an option on a dividend-paying stock when the

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Financial Management: Consider an option on a dividend-paying stock when the

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