The Call Option on a Dividend-Paying Stock Compared to a Comparable

question 18

Multiple Choice

The call option on a dividend-paying stock compared to a comparable non-dividend paying stock is:

• A)more valuable because of the dividend payments.
• B)equal in value.
• C)less valuable because cash dividends lower the stock price.
• D)equal to the cost of the non-dividend paying stock option.
• E)either equal to or greater than the value of the non-dividend paying stock option.

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