Question

You purchased 200 shares of ABC stock on July 15^th. On July 20^th, you sold 100 shares and then on July 22^nd you purchased your final 200 shares of ABC stock. The company declared a dividend of $1.10 a share on July 5^th to holders of record on Thursday, July 22^nd. The dividend is payable on July 31^st.

a. How many shares of dividends will you receive for the 200 shares that purchased on July 15^th?

b.How many shares of dividends will you be able to keep for the 100 shares that you sold on July 20^th?

c.How many shares of dividends will you receive for the 200 shares that purchased on July 22^nd?

Answer 1

Record date declared by the company is the date on which if a shareholder holds the stock,he will be entitled to receive dividend.

Here record date is 22nd july.

a) 100 out of 200 shares purchased on 15th july are sold.Only 100 shares out of those 200 are held .Hence we will recive dividend on 100 shares out of 200 shares purchases on 15th july.

Dividend=$1.1*100 =$110

b) Since we have sold the shares before the record date,we will recieve no dividend on sold 100 shares.

Dividend =$0

C)Since we hold all 200 shares purchased on 22nd july which is record date,we will get the dividend for entire 200 shares purchased on. 22nd july .

Dividend=$1.1*200=$220

If you have any doubt,please ask