Consider a Call Option on a Stock That Pays Dividends $q > 0$

question 22

Multiple Choice

Consider a call option on a stock that pays dividends at the rate $q > 0$ .Which of the following statements is most valid for the Black-Scholes model?

• A)The call is worth more than a call on an equivalent stock that pays no dividends.
• B)The probably of the option finishing up in the money is greater than that of a call on an equivalent stock that pays no dividends.
• C)The time value of the call is greater than that of a call on an equivalent stock that pays no dividends.
• D)None of the above.

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