An investor is analyzing an American call option and an American put option on a dividend-paying stock. Both options have a strike price of $20 and an expiration date in 3 months.
The risk-free interest rate is 10% per year (with continuous compounding), the current stock price is $19, and a $1 dividend is expected in one month.
a) Find lower and upper bounds for the price* of the American call option.
b) Find lower and upper bounds for the price* of the American put option
both price are at time 0