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# FIN622 - Corporate Finance GDB 2 closing date 18 jan 2016

FIN622 - Corporate Finance GDB 2 closing date 18 jan 2016

The board of directors of the Company ABC has declared a cash dividend of Rs.2 per share to be paid to the holders on February 3, 2016. The stock is trading at Rs.40 before this announcement. The ex-dividend date announced by the exchange is January 19, 2016.

You are required to discuss the following:

1. What would be the expected cum-dividend price per share and to which date the share will be traded cum-dividend?
2. What change would you expect in the price per share on the ex-dividend day?
3. Consider an investor buys the stock on ex-dividend day; will he be entitled to receive the dividend?

Special Note:

• Your answer should be to the point and based on logical facts.

Note:

For acquiring the relevant knowledge watch the course video lectures, consult recommended books, and study additional material available online or in any other mode.

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Our main purpose here discussion not just Solution

We are here with you hands in hands to facilitate your learning and do not appreciate the idea of copying or replicating solutions.

aoa dear friends plz share id for solution

Ex dividend date: Is set by the exchange where the stock is traded, several days (usually two) before the date of record, so that all trades made on previous dates can be properly settled and the shareholder list on the date of record will accurately reflect the current owners. Purchasers buying before the ex-dividend date will receive the dividend. The stock is said to trade cum dividend on these dates. Purchasers buying on or after the ex-dividend date will not receive the dividend. The stock trades ex-dividend on these dates.

If an investor buys the stock on ex-dividend day, he will not be entitled to receive the dividend.

The value of a share  would go down by about the dividend amount when the stock goes ex-dividend.

thanks for help dear

God Bless u

kya ap ny ye accurtae solution btaya ha???

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= (Closing Price per Share* – Special Dividend Per Share) / Closing Price Per Share on Last Cum Date x Closing Price Per Share

= (40 – 2 ) / 40 * 40

= 38

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