16) Extension to Black-Scholes Model Flashcards
1
Q
What are Dividends
A
Payments made by a company to its shareholders at regular intervals, the amount per share being a proportion of the company’s profits
2
Q
How do we represent dividends mathematically
A
3
Q
If Π0 = S0 and the share pays a continuous dividend, how does the value of this portfolio change in time
A
4
Q
How is the Modified Black-Scholes Equation with devidends derived
A
5
Q
What is the solution to the modified Black-Scholes equationfor a European call option
A
