Please respond to the following questions while elaborating on your insight and providing external support:
- Holding all else constant, if dividends increase, does the difference between American calls and puts increase or decrease? Why? What about the difference between European calls and puts?
- Explain in a heuristic manner why option replication on a binomial tree is a “dynamic” strategy. Expand your thoughts by providing external support that helps to provide further insight into the use of binomial trees.
Complete your 3- to 4-page response using Microsoft Word. Your well-written response should be formatted according to CSU-Global Guide to Writing and APA Requirements (Links to an external site.), with at least two external sources properly cited. Upload your completed work to the Week 6 Assignments page