Consider a stock with a price of $120 and a standard deviationof 30 percent. The stock will pay a dividend of $5 in 40 days and asecond dividend of $5 and 140 days. The current risk-free rate is 6percent per annum. An American call on this stock has an exerciseprice of $150 and expires in 100 days.
Price the American call option using the Black-Scholes Model. Showall calculations
