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

Question

Quizplus · Accepted Answer

A higher-dividend payout policy decreases the price of the underlying stock, which increases the value of a put (since puts benefit from a decrease in the stock price) and decreases the value of a call (since calls benefit from an increase in the stock price).

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