Understanding Trading, Customer Accounts and Prohibited ActivitiesDifficulty 3/5
What does the ex-dividend date determine?
- AThe date the board of directors formally declares the dividend amount
- BThe date by which the issuer must notify the exchange of the dividend
- CWhether a buyer of the stock is entitled to the declared dividend
- DThe date on which the declared dividend is actually paid to holders
Show answer and rationale
Correct: C. Buying on or after the ex-dividend date means buying without the dividend, which is what the term means. The payable date is when money moves, and the record date identifies holders of record.
- D — That is the payable date, which comes later and concerns settlement of the payment itself.
- A — That is the declaration date, when the board announces the dividend.
- B — Notification to the exchange is an administrative step and is not what the ex-date governs.