Black scholes option pricing model with dividends. 1, Option Value based on the Black-Scholes Model: 2. 3, Black-Scholes Option Pricing Model, Black-Scholes Option Pricing Model (with dilution). 4, Inputs: Inputs (with dilution effects). 5, Stock Price (S), \$ 10, Dividend Yield, %, Dividend Yield, %. 11, # of Options (), 10,, # of Options (), 10,

Black scholes option pricing model with dividends. during time dt, DyS dt dividends are received. Assuming the usual stochastic model we have. dS = µS dt + ?S dB ? DyS dt = (µ ? Dy)S dt + ?S dB. (1). Proceeding in the same fashion as in the derivation of the Black-Scholes partial differential equation, we construct a portfolio ? = aS ?V, where V is the price of the option and.

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