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

question 19

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.
• E)None of the above.

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Definitions:

Jacob S. Coxey

An American politician, known for leading the "Coxey's Army" march on Washington D.C. in 1894 to advocate for unemployed workers and public infrastructure jobs.

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