Question: (4 points) Consider the one-period binomial option pricing model. Let C denote the price of a European call on a stock which pays continuous dividends.

(4 points) Consider the one-period binomial option pricing model. Let C denote the price of a European call on a stock which pays continuous dividends. What is the impact on the value of European call option prices if the company decides to increase the dividend yield paid to the shareholders? (a) The call-option price will drop. (b) The call-option price will increase. (c) The call-option price will always remain constant. (d) The impact on the price of the call cannot be determined using the binomial option pricing model. (e) There is not enough information provided

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