A company declares a dividend of 35 cents per share,which was payable on 14 September.Immediately prior to the declaration of the dividend,the share price was $4.79.At the close of trading on the stock exchange on 13 September,the share price was $5.44.What is the theoretical ex-dividend price of the share?

Question

Quizplus · Accepted Answer

The ex-dividend date is the date after which a buyer of the stock is not entitled to receive the dividend. Typically, the stock price drops by an amount equal to the dividend on the ex-dividend date.

Based on the information provided, the dividend amount is 35 cents per share. Therefore, the theoretical ex-dividend price of the share can be calculated as follows:

Ex-dividend price = Closing price on the day before ex-dividend date - Dividend amount
Ex-dividend price = $5.44 - $0.35 = $5.09

Therefore, the best choice is C, with an ex-dividend price of $5.09.

A Company Declares a Dividend of 35 Cents Per Share,which