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

Question

Quizplus · Accepted Answer

On the ex-dividend date, the stock price usually drops by the amount of dividend declared, but not always. Factors like market conditions, perceptions about the company's future growth prospects, and the level of the dividend payout ratio can influence the magnitude of price drop. It is rare to see the stock price drop by more than the dividend amount on the ex-dividend date.

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