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

Question 13

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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