Suppose in any period the dividend on a share takes one of four values: $0.00, $0.08, $0.28 or $0.60 with equal probability. The share trades for 15 periods and then become valueless. You have just bought this share prior to Period 9 for $2.48. This implies that:
A) If you do not manage to sell this share to anyone else before trading ends, then you will be looking at losing $0.80.
B) If you manage to sell the share to another trader before trading ends for $2.78, then you have enjoyed a speculative gain of $1.10.
C) Even if you manage to sell the share to another trader before trading ends for $2.78, then you have made a loss of $0.82.
D) You would make a speculative gain simply by hanging on to this asset till then end of trading.

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The Answer of Suppose in any period the dividend on a share takes one of four values: $0.00, $0.08, $0.28 or $0.60 with equal probability. The share trades for 15 periods and then become valueless. You have just bought this share prior to Period 9 for $2.48. This implies that:
A) If you do not manage to sell this share to anyone else before trading ends, then you will be looking at losing $0.80.
B) If you manage to sell the share to another trader before trading ends for $2.78, then you have enjoyed a speculative gain of $1.10.
C) Even if you manage to sell the share to another trader before trading ends for $2.78, then you have made a loss of $0.82.
D) You would make a speculative gain simply by hanging on to this asset till then end of trading.

Suppose in Any Period the Dividend on a Share Takes