The risk free rate is 8 and the dividend yield on the index


A stock index currently stands at 300. It is expected to increase or decrease by 10% over each of the next two time periods of three months.

The risk free rate is 8% and the dividend yield on the index is 3%. What is the value of a sux month put option on the index with a strike price of 300 if it is a) European and b) American?

 

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Finance Basics: The risk free rate is 8 and the dividend yield on the index
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