Lower dividend-payout policies have a __________ impact on the value of the call and a __________ impact on the value of the put compared to higher dividend-payout policies.
A) negative; negative
B) positive; positive
C) positive; negative
D) negative; positive
E) zero; zero

Question

Quizplus · Accepted Answer

Lower dividend-payout policies increase the value of a call option because the stock price is likely to be higher if dividends are not paid out. Conversely, they decrease the value of a put option because a higher stock price makes the put option less likely to be in the money.

Lower Dividend-Payout Policies Have a __________ Impact on the Value