An American-Style Call Option with Six Months to Maturity Has

question 24

Multiple Choice

An American-style call option with six months to maturity has a strike price of $42.The underlying stock now sells for $50.The call premium is $14. If the company unexpectedly announces it will pay its first-ever dividend four months from today, you would expect that

• A)the call price would increase.
• B)the call price would decrease.
• C)the call price would not change.
• D)the put price would decrease.

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Definitions:

Norming

The process during which a group establishes norms or shared standards of behavior that dictate member conduct.

Interpersonal Interdependence

The degree to which the actions of one individual affect the outcomes and welfare of another in a relationship.

Group Cohesiveness

The extent to which members of a group feel bonded or united towards achieving a common objective or maintaining group membership.

Social Compensation

Increased effort on a collective task to compensate for other group members’ actual, perceived or anticipated lack of effort or ability.