This flashcard is just one of a free flashcard set. See all flashcards!
164
4.When dividends increase with all else remaining the same, which of the following is true?
A.Both calls and puts increase in value
B.Both calls and puts decrease in value
C.Calls increase in value while puts decrease in value
D.Puts increase in value while calls decrease in value
A.Both calls and puts increase in value
B.Both calls and puts decrease in value
C.Calls increase in value while puts decrease in value
D.Puts increase in value while calls decrease in value
Answer: D
Dividends during the life of an option reduce the final stock price. As a result dividend increases cause puts to increase in value and calls to decrease in value.
Dividends during the life of an option reduce the final stock price. As a result dividend increases cause puts to increase in value and calls to decrease in value.
Flashcard info:
Author: CoboCards-User
Main topic: Finance & Investment
Topic: Derivatives
Published: 27.10.2015
A. Both calls and puts increase in value
B. Both calls and puts decrease in value
C. Calls increase in value while puts decrease in value
D. Puts increase in value while calls decrease in value