Question
Suppose an unexpected announcement of a large dividend on a stock doesn't affect its share price, which of the following is false? a. If the
Suppose an unexpected announcement of a large dividend on a stock doesn't affect its share price, which of the following is false?
a. If the ex-dividend day is before the maturity of a call option on the stock, the announcement should have a negative effect on the option value.
b. If the ex-dividend day is after the maturity of a call option on the stock, the announcement should have a negative effect on the option value.
c. If the ex-dividend day is after the maturity of a put option on the stock, the announcement should have no effect on the option value.
d. If the ex-dividend day is before the maturity of a put option on the stock, the announcement should have a positive effect on the option value.
Please also explain why.
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