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

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Quizplus · Accepted Answer

This is false.The stock price will drop on the ex-dividend date,which is two days prior to the holder of record date,which is well before the actual January 31 payment date.Also,because the dividend is taxable,the price decline is generally somewhat less than the full amount of the dividend.

If on January 3 a Company Declares a Dividend of $1.50