If on January 2, 2008, a Company Declares a Dividend

question 42

True/False

If on January 2, 2008, a company declares a dividend of $1.50 per share, payable on January 31, 2008, to holders of record on January 17, then the price of the stock should drop by approximately $1.50 on January 15, which is the ex-dividend date.

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Definitions:

Cumulative Profits

The total amount of profit a company has earned over a specific period, adding together all net profits and losses to date.

Initial Outlay

The initial investment or capital required to start a project or investment.

Mutually Exclusive

Events or choices that cannot occur or be chosen at the same time, necessitating an either/or selection.

Financial Viability

The ability of an entity to generate sufficient income to meet operating payments, debt commitments, and, where applicable, to allow for growth, while maintaining a solid financial position.