Ex-Dividend Reasoning

CFA Level I Equities
#1

Hello,

I have a question regarding the ex-dividend date and I can’t seem to find a solid explanation anywhere. In the book it says that when a dividend goes into ex-dividend the stock price will drop by the amount of the dividend. Why is that?

Thank you!

#2

If you buy the stock on Tuesday, you get the $2.00 dividend.

If you buy the stock on Wednesday, you don’t get the $2.00 dividend.

How do you think the Wednesday price will compare to the Tuesday price?