A Higher-Dividend Payout Policy Will Have a ________ Impact on the Value

question 13

Multiple Choice

A higher-dividend payout policy will have a ________ impact on the value of a put and a ________ impact on the value of a call.

• A) negative; negative
• B) negative; positive
• C) positive; negative
• D) positive; positive

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Definitions:

Interest Payment

Interest payment refers to the amount paid by a borrower to a lender as compensation for the use of borrowed money, typically calculated as a percentage of the principal sum.

Journal Entry

A record in the books of accounts that captures the financial transactions of a business.

Discount on Bonds Payable

The disparity between a bond's nominal value and its market price, occurring when the bond is traded at a price below its nominal value.

Straight-line Amortization

An accounting method of incrementally reducing the cost value of an intangible asset over its useful life.