You own 10,000 shares of Mars, Co. which is currently trading for $11.50 per share. The company has announced that it will soon pay a special dividend of $1.50 per share. Tomorrow is the ex-dividend day. Ignoring taxes, what do you expect your block of shares will be worth tomorrow?

Question

Quizplus · Accepted Answer

On the ex-dividend day, the stock price typically drops by the amount of the dividend. Therefore, the expected price per share would be $11.50 - $1.50 = $10.00. Thus, 10,000 shares would be worth 10,000 * $10.00 = $100,000.

You Own 10,000 Shares of Mars, Co