AFB Corp.Declared a $1.00 dividend on January 5th,with an ex-dividend date of January 19th,a record date of January 21st,and a payment date of March 15th.Doug purchased AFB stock on January 6th.Which of the following statements is MOST correct?
A) Doug will not receive the dividend because he purchased the stock after the declaration date.
B) Doug will not receive the dividend because he purchased the stock prior to the record date.
C) Doug will receive the dividend if he still sells his stock on January 20th because he owned the stock on the ex-dividend date.
D) Doug will receive the dividend if he still owns the stock on January 21st, even if he sells the stock before the payment date.

Question

Quizplus · Accepted Answer

The ex-dividend date is the date on which the stock begins trading without the dividend. If Doug purchased the stock on January 6th, he would have owned the stock on January 19th (the day before the ex-dividend date). Therefore, he would be entitled to receive the dividend if he still owns the stock on January 21st (the record date), even if he sells the stock before the payment date. Therefore, option D is the most correct statement.

AFB CorpDeclared a $1