Which of the following statements is incorrect?
A) Call options tend to increase with increases in interest rates.
B) Call options on riskier assets are worth more than those on low-risk assets.
C) Call options on risky assets with a long time to expiration are very valuable.
D) Options on high-dividend paying stocks or assets with large cash distributions are worth more than those on non-cash flow generating assets.

Question

Quizplus · Accepted Answer

Options on high-dividend paying stocks or assets are generally worth less than those on non-cash flow generating assets because dividends reduce the price of the underlying stock, which in turn can reduce the value of a call option.

Which of the Following Statements Is Incorrect