The Call Option on a Dividend Paying Equity Compared to a Non-Dividend

Multiple Choice

The call option on a dividend paying equity compared to a non-dividend paying equity is:

A) more valuable because of the extra dividend payment.
B) equal in value because cash dividends are paid on equity only.
C) less valuable because after cash dividends are paid out the value of equity decreases.
D) less valuable if the dividend paying equity is in-the-money while the non-dividend paying
Equity if out-of-the-money.
E) None of the above.