Absent taxes and market imperfections, the market value of a stock will tend to decrease by roughly the amount of the dividend on the:

Question

Quizplus · Accepted Answer

The market value of a stock tends to decrease by approximately the amount of the dividend on the ex-dividend date because this is the date on which a new buyer of the stock is no longer entitled to receive the dividend that has been declared. This adjustment reflects the fact that the dividend value is now going to be paid out to the seller rather than the buyer.

Absent Taxes and Market Imperfections, the Market Value of a Stock