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Buffelhead's stock price is $220 and could halve or double in each six-month period. Assume that you own a one-year American put option on Buffelhead stock with an exercise price of $220. The interest rate is 21% a year.
a. Would you ever want to exercise an American put early?
b. Calculate the value of the Buffelhead American put.(Do not round intermediate calculations. Round your answer to 2 decimal places.)c. Calculate the value of the put if it had been European-style.(Do not round intermediate calculations. Round your answer to 2 decimal places.)
Suppose a stock had an initial price of $98 per share, paid a dividend of $2.90 per share during the year, and had an ending share price of $78.50. Compute the percentage total return. What was the dividend yield? What was the capital gains yield?
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