Consider an American Call option with a Strike of $100 and a term of 6 months at time 0. After 3 months the spot price i

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answerhappygod
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Consider an American Call option with a Strike of $100 and a term of 6 months at time 0. After 3 months the spot price i

Post by answerhappygod »

Consider an American Call option with a Strike of $100 and a
term of 6 months at time 0.
After 3 months the spot price is 105 and a dividend will be paid
amounting to $1. The risk free rate is 5%.
Should this option be exercised at time 3 months after
time 0?
a) Not enough information to answer the question
b) Yes
c) Indifferent between early exercise and holding to
maturity
d) No
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