8) On average, people who buy put options on those utility stocks with high dividend yields will benefit

Finance Aug 07, 2020

8) On average, people who buy put options on those utility stocks with high dividend yields will benefit . True or false? Explain.

Expert Solution

Answer:

False -

Explanation: Utility stocks generally high dividend paying stocks. People buy put options to make profit when stock goes down. Although, Put premium automatically factored the dividends which does not effect the put options. So, buyers will not gain on put options when companies are high dividend paying.

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