If the question says the “cum price is X and the upcoming dividend is Y”, do we use Y as D1 in the Po = D1/(k-g) model? And what is the term for it when it is not entitled to the upcoming dividend?
YEs. The term should be ex coupon
cum-dividend means “includes dividend” ex-dividend means “without dividend”
Prior to the ex-dividend date, the shares trade cum dividend. On the ex-dividend date and thereafter, they trade ex dividend. On the ex-dividend date, the share price often falls by approximately the amount of the dividend. And yes, the “upcoming dividend” is D1.