How Does a Dividend Payment Impact the Option Price

question 8

Essay

How does a dividend payment impact the option price?

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Definitions:

Conditioned Stimulus

A previously neutral stimulus that, after being paired with an unconditioned stimulus, eventually triggers a conditioned response.

Classical Conditioning

A conditioning technique where two stimuli are repeatedly connected; the reaction, at first prompted by the second stimulus, ultimately becomes prompted by only the first stimulus.

Unconditioned Stimulus (US)

A stimulus that naturally triggers a response without the need for prior learning.

Conditioned Stimulus (CS)

In classical conditioning, a previously neutral stimulus that, after being repeatedly paired with an unconditioned stimulus, evokes a conditioned response.