n NISM Certifications
VII NISM Series VII
Medium

When a company declares an extraordinary dividend, the total dividend amount is _______ all the strike prices of option contracts on that stock.

Practice question from NISM Series VII Mock Test 2 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Added to

  2. Reduced from

    Correct answer

  3. C

    Multiplied with

  4. D

    Divided by

Why this is the answer

In the event of an extraordinary dividend (above 2% of the stock’s market price), the dividend amount is reduced from all strike prices of option contracts. The revised prices take effect from the ex-dividend date.

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NISM Series VII Mock Test 2