If on January 3, 2011, a company declares a dividend of $1.50 per share, payable on January 31, 2011, then the price of the stock should drop by approximate $1.50 on January 31.

Question

Quizplus · Accepted Answer

The price of the stock typically drops by the amount of the dividend on the ex-dividend date, which is usually a few days before the actual payment date. Therefore, the stock price may not drop by $1.50 on January 31, but rather on the ex-dividend date.

If on January 3, 2011, a Company Declares a Dividend