Construct a quarterly binomial model

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Question - Consider a stock that pays a quarterly dividend of $0.50. The current stock price is $100 and the risk-free rate is 3% per year. The stock has an expected return of 8% per year and return volatility of 20% per year. Construct a 2-period quarterly binomial model for the stock assuming equally likely transitions.

Reference no: EM132183934

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