Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 57

Dividend dates—market price effects Blanker, Inc., has paid a regular quarterly cash dividend of $0.50 per share for several years. The common stock is publicly traded. On February 21 of the current year, Blanker’s board of directors declared the regular first-quarter dividend of $0.50 per share payable on March 30 to stockholders of record on March 15.

Required:

As a result of this dividend action, state what you would expect to happen to the market price of the common stock of Blanker, Inc., on each of the following dates. Explain your answers.

 a. February 21.  b. March 13.

 c. March 15.      d. March 30.

Step 1 of 4

Dividend dates-Effects of market price:

a) February 21 is the date of declaration to dividend payable for year’s first quarter. Because this is the same regular dividend amount that is usually paid in the earlier years, therefore, the market price of stock would not be radically affected by this declaration.