Shareholders selling shares between the ex-dividend date and date of record: A) receive the dividend. B) forfeit the dividend, with the proceeds going to the buyer. C) forfeit the dividend, with the proceeds staying with the company. D) share the dividend with the buyer. Your answer: B was incorrect. The correct answer was A) receive the dividend. The date of record is the date on which the shareholders of record are designated to receive the dividend. The ex-dividend date is the cut-off date for receiving the dividend. Shares sold after the ex-dividend date are sold without claim to the dividend, even if they are sold prior to the date of record. The dividend would be paid to the holder as of the close of trading on the day prior to the ex-dividend date. This answer/explanation doesn’t make sense to me. If the shareholder is selling the shares after the ex-dividend date doesn’t that mean they forfeit the dividend?
No. The ex-dividend date is when the security begins trading without it’s dividend. So… If you buy the security after the ex-date (trading without dividend), seller retains dividend. If you buy the security before the ex-date (trading without dividend), seller loses dividend.
Further, a $50 stock with a $20 dividend trades near $30 after the ex-dividend date.
apcarlso - it is mistake or I’m missing again something here. In your post “If you buy the security before the ex-date (trading without dividend), seller loses dividend.” is it not correct to say (trading with dividend). Correct me if I’m wrong. Thanks.
yeah u re right, he made a mistake
Yep… my mistake. First line should read… “(trading with dividend)” Thanks for catching that.