us, the current stock price will be adjusted to INR 480 – INR 14.70 = INR 465.30. Using this price as the current
price, the option price would be INR 3.30. is example shows that the price of the option would change from INR
7.14 for a non-dividend-paying stock to INR 3.30 for a dividend-paying stock.
16.8 Volatility
Of the ve variables that impact option prices, exercise price, current stock price, time to maturity of the
option, and risk-free interest rates are known at the time the option is bought. However, the volatility of
stock returns is unknown and needs to be estimated. If volatility ...
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