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You could use the (time-scaled) trailing twelve month (TTM) dividend yield as it is a much easier number to get a hold of and can be a reasonable approximation. Also, while the upcoming dividends are not always published recent dividends should be easy to obtain and you can calculate the TTM yield yourself if you need to. experquisite and user3264325 both ...

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It is because Black and Scholes assume that the stock follows a geometric brownian motion, i.e. under the historical probability $\mathbb{P}$ the stock moves according to: $$\frac{dS(t)}{S(t)} = \mu dt + \sigma dW^{\mathbb{P}}(t)$$ Solving this SDE we obtain that  S(t)=S(0)e^{(\mu - \frac{1}{2}\sigma^2)t + \sigma W^{\mathbb{P}}(t)} = S(0)e^{(\mu - ...

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For European options you can utilise put-call parity and reverse out the implied dividend yield. I.e. F(T,K) = C(T,K) - P(T,K) and obviously F(T) = S(t)*e^[(r-d)*(T-t)] Interestingly, you get mostly OK results for American ATM options also. Cf. Avellaneda's comments on this in one of his lecture's, page 18, ...

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Dividend estimation and forecast is not an easy problem. This paper describes and compares few approaches. If the company pays dividend according to a certain scheme (quarterly, annually, etc.), it's easy to forecast a future dividend yield, using last known paid amount and the underlying price. In some cases (like European and Asian companies), the ...

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In real life, you imply the unknown dividend yields from the forwards and the discount curve.

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If it is a real example, then it may be unnecessary to consider the dividend explicitly. After all, the Gordon formula states that the stock price is equal to the discounted future cash flow of dividends. For instance, if I have a call at strike K and the future dividend is announced when the market didn't expect it, then most likely the spot price will go ...

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