Question

An investor must purchase a stock before the _____ date to be assured of receiving a...

An investor must purchase a stock before the _____ date to be assured of receiving a declared dividend.

ex-dividend

record

payment

declaration

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Answer #1

Ans: Ex-dividend

  Ex-dividend indicates when a declared dividend belongs to the seller rather than the buyer. Investors should be aware of the ex-dividend date.

Investors who purchase shares on or after the ex-dividend date will not be paid that quarter’s dividend although they will be entitled to future dividends, assuming they still hold the shares.

Investors who purchase shares before the ex-dividend date will be paid that quarter’s dividend.The reason why the ex-dividend date is two days earlier than the record date is because it takes three days for a trade to settle for cash and shares to legally trade hands.

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