You purchased 200 shares of ABC on July 15th.On July 20th, you purchased another 100 shares and then on July 22st you purchased your ﬁnal 200 shares of ABC.The company declared a
Dividend of £1.10 a share on July 5th to holders of record on Friday, July 23rd.The dividend is
Payable on July 31st.How much dividend income will you receive on July 31st from ABC?

Question

Quizplus · Accepted Answer

The total number of shares owned by the investor on July 23rd (record date) is 500 (200 + 100 + 200). 
Therefore, the total dividend income received will be:

Total dividend income = Number of shares * Dividend per share
Total dividend income = 500 * £1.10
Total dividend income = £550

However, the investor purchased 300 shares after the ex-dividend date (July 16th). Therefore, these shares are not eligible for receiving the dividend. The remaining 200 shares (purchased on July 15th) will be entitled to receive the dividend.

Dividend income received = Number of eligible shares * Dividend per share
Dividend income received = 200 * £1.10
Dividend income received = £220

Hence the correct answer is C) £330. (£220 for eligible shares and £110 for ineligible shares).

You Purchased 200 Shares of ABC on July 15th