Share prices drop on the ex-dividend date, but usually the drop is less than the amount of the dividend.

Question

Quizplus · Accepted Answer

Share prices drop on the ex-dividend date because the dividend payment is no longer included in the price. However, the drop is often less than the amount of the dividend because the market expects the company to continue performing well and potentially increasing future dividends, which can offset the immediate loss of the dividend payment.

Share Prices Drop on the Ex-Dividend Date, but Usually the Drop