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What is American Options Pricing Explained about?
This document discusses pricing American options on stocks with dividends. It begins by explaining that American call options will not be exercised early if there are no dividends. With dividends, early exercise of calls depends on comparing the pre-dividend stock price to the post-dividend price plus time value. For puts, early exercise depends on interest earned exceeding time value. The rest of the document uses a two-period tree model to illustrate pricing American options and determining exercise bound
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- Hhsfdksdfkk4
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- EN