Question

Keenan Corp declared a dividend of $1.10 per share on Friday February 9, payable on Friday March 2 to shareholders of record as of Tuesday February 27. Katie bought 1,000 shares of Keenan on Friday February 23 and Jake sold 500 shares on Thursday February 22.

Will Katie receive a dividend? If so, how much will she receive? Briefly explain.

Will Jake receive a dividend? If so, how much will he receive? Briefly explain.

Answer 1

Question - 1

Yes, Katie will receive dividend, since shares were acquired before expiry of ex-dividend date.

As the record date is Feb 27 and stock is acquired on Feb 23 Katie is eligible for dividend. Hence she receives dividend = 1000 * 1.10 = 1100

Question - 2

No, Jake cannot receive a dividend. He was not a shareholder as on the record date i.e Feb 27. He sold his holding of 500 shares on Feb 22.

So he will not receive any dividend ..... Or Dividend = 0