If the Stock Makes a Dividend Payment Before the Expiration

question 41

Multiple Choice

If the stock makes a dividend payment before the expiration date, then the put-call parity relation is

• A)Value of call = value of put + share price − present value (PV)of dividend − PV of exercise price.
• B)Value of call = value of put − share price + PV of dividend − PV of exercise price.
• C)Value of call = value of put + share price + PV of dividend + PV of exercise price.
• D)Value of call = value of put + share price + PV of dividend − PV of exercise price.

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Definitions:

Upstream View

A perspective focusing on the early causes or preventive measures for issues, often used in health promotion to address factors before they result in problems.

Metaphor

A figure of speech in which a word or phrase is applied to an object or action to which it is not literally applicable, often used to make a comparison without using "like" or "as".

Blood-Pressure Screening

The measurement of the force of blood against the walls of arteries to identify potential health issues.

Level of Prevention

Refers to the strategies aimed at preventing disease or injury before it occurs (primary), minimizing impact after it does (secondary), or managing long-term effects and rehabilitation (tertiary).