Question

Difficulty: HardSettlement Dates, Trade Confirmations, and Corporate Actions

An investor holds 450 shares of XYZ Corporation common stock, currently valued at $80.00 per share. XYZ Corporation announces a 3-for-2 stock split, after which it pays a quarterly cash dividend of$ 0.50 per share on all post-split shares. What is the total dollar amount of the dividend payment the investor will receive?

Answer: 337.5 $

Answer

The total dividend payment received by the investor is $337.50.

In a 3-for-2 stock split, the investor receives 3 shares for every 2 shares previously held, expanding the position from 450 shares to 675 shares (

450 \times \frac{3}{2} = 675

). Cash dividends declared after a stock split apply to all post-split shares held. Multiplying 675 post-split shares by the

0.50 per share dividend yields a total dividend payment of

337.50.

Step-by-Step Solution

1

Determine the post-split share quantity

450 shares * (3 / 2) = 675 shares

A 3-for-2 forward stock split increases total shares by multiplying the initial count by 3/2.

2

Calculate total dividend distribution

675 shares *

0.50 =

337.50

The cash dividend rate applies to the adjusted post-split number of shares owned on the record date.

Key Concept

Adjusting position share count for forward stock splits and applying post-split corporate action cash distributions.

Estimated Time:1m 30s

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Topics

Settlement Dates, Trade Confirmations, and Corporate Actions