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Question

Difficulty: EasySettlement Dates, Trade Confirmations, and Corporate Actions

Match each dividend timeline event in a corporate dividend distribution with its correct definition.

  • Declaration DateThe date on which the board of directors authorizes and announces the dividend payment.
  • Ex-Dividend DateThe first date on which a purchased stock trades without the buyer having the right to receive the declared dividend.
  • Record DateThe cutoff date set by the corporation to determine which shareholders are officially registered on the company's books to receive the dividend.
  • Payable DateThe date on which the dividend distribution checks are mailed or funds are electronically deposited to eligible shareholders.

Answer

Declaration Date corresponds to the board's official authorization announcement; Ex-Dividend Date corresponds to the first trading day without dividend eligibility; Record Date corresponds to the corporate cutoff date for shareholder registration; Payable Date corresponds to the distribution date.
The four key dividend dates follow the DERP order: Declaration Date (board authorization), Ex-Dividend Date (first trading date without dividend rights, established by SRO rules based on T+1 settlement), Record Date (issuer cutoff date for registered owners), and Payable Date (disbursement date).

Step-by-Step Solution

1
Match Declaration Date
Declaration Date matches the board of directors' announcement of the dividend.
The corporate board must officially declare the dividend before any other event takes place.
2
Match Ex-Dividend Date
Ex-Dividend Date matches the first day the stock trades without dividend rights.
Under regular-way settlement (T+1), purchasing on or after the ex-dividend date means the trade will not settle by the record date.
3
Match Record Date
Record Date matches the official corporate cutoff list date.
Only investors listed on the company's transfer agent records on this date receive the dividend.
4
Match Payable Date
Payable Date matches the actual disbursement of funds.
This is the day dividend checks or electronic transfers are sent to registered holders.

Key Concept

Corporate Dividend Milestone Sequence (DERP)
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Topics

Settlement Dates, Trade Confirmations, and Corporate Actions