What would you expect to happen to the price of a share of stock on the day it goes ex-dividend? The price should:
A) increase by the amount of the dividend.
B) decrease by the amount of the dividend.
C) decrease by one-half the amount of the dividend.
D) remain constant.

Question

Quizplus · Accepted Answer

When a stock goes ex-dividend, it means that the investors who buy the stock on or after the ex-dividend date won't receive the upcoming dividend payment. As a result, the price of the stock will generally drop by approximately the same amount as the dividend payment. Therefore, the correct answer is B, decrease by the amount of the dividend.

What Would You Expect to Happen to the Price of a Share