In an efficient market, ignoring taxes and time value, the price of stock should:

Question

Quizplus · Accepted Answer

In an efficient market, the price of stock should decrease by the amount of the dividend immediately on the ex-dividend date, as investors who buy the stock after that date will not be entitled to receive the upcoming dividend payment. Therefore, the stock price should adjust downward to reflect the decrease in value that results from the dividend being paid out to existing shareholders. The declaration date, on the other hand, is when the company announces its intention to pay a dividend, but it does not affect the stock price directly.

In an Efficient Market, Ignoring Taxes and Time Value, the Price