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Dividends

A stock trades ex-dividend on or after the ex-dividend date, at which point the owner receives the dividend payment regardless of who holds the stock currently. After the ex-date, the stock price usually drops by the expected dividend amount since that value no longer belongs to the company. A stock trades cum-dividend, or with dividend rights, up until the ex-dividend date, after which it trades without the dividend rights. Limit orders are useful for volatile stocks as investors get their specified purchase or sell price when the trade executes.

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Amit Gautam
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18 views

Dividends

A stock trades ex-dividend on or after the ex-dividend date, at which point the owner receives the dividend payment regardless of who holds the stock currently. After the ex-date, the stock price usually drops by the expected dividend amount since that value no longer belongs to the company. A stock trades cum-dividend, or with dividend rights, up until the ex-dividend date, after which it trades without the dividend rights. Limit orders are useful for volatile stocks as investors get their specified purchase or sell price when the trade executes.

Uploaded by

Amit Gautam
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Ex-Dividend

A stock trades ex-dividend on or after the ex-dividend date (ex-date). At this point, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock. After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend.

Cum dividend Cum dividend means "with dividend." A stock trades cum-dividend up until the exdividend date. On or after this point, the stock trades without its dividend rights.

Dividend-Paying Methods Residual- leftover equity after taking up projects Stability maintain debt / equity, leads to disbalance in dividend policy

The reason for the adjustment is that the amount paid out in dividends no longer belongs to the company and this is reflected by a reduction in the company's market cap Limit orders typically cost more than market orders. Despite this, limit orders are beneficial because when the trade goes through, investors get the specified purchase or sell price. Limit orders are especially useful on a low-volume or highly volatile stock.

Stock splits Taking out old shares from market and issuing new shares at new prices (by the inverse of the ratio of the split so that market cap is constant. http://www.investopedia.com/articles/01/072501.asp#axzz1oum7l6Km
The first reason is psychology. As the price of a stock gets higher and higher, some investors may feel the price is too high for them to buy, or small investors may feel it is unaffordable. Splitting the stock brings the share price down to a more "attractive" level. The effect here is purely psychological. The actual value of the stock doesn't change one bit, but the lower stock price may affect the way the stock is perceived and therefore entice new investors. Splitting the stock also gives existing shareholders the feeling that they suddenly have more shares than they did before, and of course, if the prices rises, they have more stock to trade To qualify for the reduced rate, an investor has to have owned the stock for 60 consecutive days within the 121-day window centered on the ex-dividend date. Note, however, that the purchase date does not count toward the 60-day total.

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