1. Suppose a stock had an initial price of $76 per share, paid a dividend of $1.52 per share during the year, and had an ending share price of $88. What was the dividend yield?
2. Axle Automotive Stock currently sells for $64 a share. Each quarter, its price will either increase by 7% or fall by 13%. The risk-free interest rate is 6% con- vertible quarterly. Use risk-neutral probabilities to find the no-arbitrage price of a European call option to purchase 100 shares of the stock at its current $64 per share price if its expiration is in two quarters.