Ignoring Taxes and All Else Held Constant,the Market Value of a Stock

question 70

Multiple Choice

Ignoring taxes and all else held constant,the market value of a stock should decrease by the amount of the dividend on the:

• A)dividend declaration date.
• B)ex-dividend date.
• C)date of record.
• D)date of payment.
• E)day after the date of payment.

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Definitions:

Preemptive Right

A shareholder’s option to purchase new issuances of shares in proportion to the shareholder’s current ownership of the corporation.

Model Business Corporation Act

A set of model laws prepared to assist states in drafting legislation to regulate the formation and operation of corporations.

Articles of Incorporation

The primary document required to register a corporation with a state, detailing the fundamental aspects of the company, such as its name, purpose, and structure.

Share Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the overall value of the shares remains the same.