Asked by Crystal Rivas on May 21, 2024

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All else equal, call option values are higher

A) in the month of May.
B) for low dividend-payout policies.
C) for high dividend-payout policies.
D) in the month of May and for low dividend-payout policies.
E) in the month of May and for high dividend-payout policies.

Call Option Values

The worth of a call option based on factors like the underlying asset's price, the strike price, and the time to expiration.

Dividend-Payout Policies

Corporate strategies determining the size and timing of dividend payments to shareholders.

Month of May

The fifth month of the year in the Gregorian calendar, associated with spring in the northern hemisphere and autumn in the southern hemisphere.

  • Comprehend the impact of market conditions and option characteristics on the valuation and profitability of options.
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MS
Matthew SamahaMay 22, 2024
Final Answer :
B
Explanation :
Call option values are higher for stocks with low dividend-payout policies because dividends decrease the price of the underlying stock, reducing the value of call options.