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

question 18

Multiple Choice

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

• A) more valuable because of the extra dividend payment.
• B) equal in value because cash dividends are paid on stock only.
• C) less valuable because cash dividends are paid on stock only.
• D) less valuable if the dividend paying stock is in-the-money while the non-dividend paying stock if out-of-the-money.

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Definitions:

Severe Anxiety Reaction

A heightened state of overwhelming fear or discomfort, typically with acute physical and psychological symptoms.

Heart Rate

The number of heartbeats per unit of time, usually expressed as beats per minute (bpm).

Panic Disorder

An anxiety disorder characterized by recurrent unexpected panic attacks and fear of future attacks.

Obsessive-Compulsive Disorder

A mental disorder characterized by recurrent, unwanted thoughts (obsessions) and repetitive behaviors (compulsions).