If the Underlying Stock Pays a Dividend Before the Expiration

question 70

Multiple Choice

If the underlying stock pays a dividend before the expiration of the options that will have the following effect on the price of the options:
I. increase the value of the call option II) increase the value of the put option
III. decrease the value of the call option
IV. decrease the value of the put option

• A) I and II only
• B) III and IV only
• C) I and IV only
• D) II and III only

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Definitions:

Human Volition

The capacity or power of individuals to make choices and decisions with a sense of free will, uninfluenced by external forces.

Determined Behavior

Actions that are influenced or controlled by external or internal factors, rather than by free will.

Absolutist Perspective

A viewpoint that believes in absolute principles in political, ethical, or philosophical matters, with no room for relative interpretations.

Visible Disability

A physical or health condition that is clearly apparent or visible to others and may affect an individual's interaction or accessibility in society.