The dividend yield on a stock option is similar to the foreign interest rate on a foreign currency option.

Question

Quizplus · Accepted Answer

Both the dividend yield on a stock option and the foreign interest rate on a foreign currency option represent the income earned from holding the underlying asset. The dividend yield is the percentage of the stock's price paid out in dividends, while the foreign interest rate is the interest rate earned on a foreign currency deposit.

The Dividend Yield on a Stock Option Is Similar to the Foreign