A corporation declares a cash dividend payable to shareholders of record on Thursday, November 12. Assuming all intermediate calendar days are normal business days with no exchange holidays, what is the latest date a retail investor can execute a regular-way trade to purchase the stock and receive the dividend, and what is the ex-dividend date established for this distribution under current SEC and FINRA rules?
- The latest trade date to receive the dividend is Wednesday, November 11, and the ex-dividend date is Thursday, November 12.Cevap
- BThe latest trade date to receive the dividend is Tuesday, November 10, and the ex-dividend date is Wednesday, November 11.
- CThe latest trade date to receive the dividend is Thursday, November 12, and the ex-dividend date is Friday, November 13.
- DThe latest trade date to receive the dividend is Wednesday, November 11, but only if the broker-dealer acts in a principal capacity and discloses a markup on the trade confirmation.
Cevap
The latest trade date to receive the dividend is Wednesday, November 11, and the ex-dividend date is Thursday, November 12.
Under current T+1 regular-way settlement rules for corporate equities, trades settle one business day after the trade date (). To be entitled to a dividend, an investor must be a holder of record on the record date (Thursday, November 12). Purchasing shares on Wednesday, November 11 ensures that the trade settles on Thursday, November 12, securing the dividend. Because purchasing on Thursday, November 12 would result in settlement on Friday, November 13 (too late for the dividend), the stock begins trading ex-dividend on Thursday, November 12 (the record date).
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Anahtar Kavram
Under T+1 regular-way settlement rules, the ex-dividend date for standard cash distributions is the record date itself. Investors must purchase stock at least one business day prior to the record date to be entitled to receive the dividend.
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