Dividends on the underlying common stock will affect the option price.

Name: Dividends on the underlying common stock will affect the option price.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Dividends can decrease the value of the underlying stock and therefore decrease the value of the option. Additionally, if a dividend is paid out, the option holder may not be entitled to receive it, which can also affect the option price. Therefore, dividends on the underlying stock will affect the option price.

Dividends on the Underlying Common Stock Will Affect the Option