It is August 14th and John has just purchased 100 shares of Cash Cow Inc. for $1,200 with a settlement date of August 16th. Cas

Question

vladimir1956

1 month ago

9

It is August 14th and John has just purchased 100 shares of Cash Cow Inc. for $1,200 with a settlement date of August 16th. Cas

h Cow recently declared a dividend of $1.00 per share payable to shareholders of record as of August 15th. How much money did John pay for the right to the recently declared dividend? A. John paid $0.00 for the dividend because he was not the shareholder of record on August 15th. Therefore, the dividend payment went to the previous owner of the stock. B. John paid $100.00 for the dividend because he purchased the stock prior to the dividend record date. C. John paid $50.00 for the dividend because the record date was between purchase date of August 14th and the settlement date of August 16th. Therefore, the dividend payment is shared equally between the previous owner of the stock and John. D. This is a complicated issue and not easily answered. Thus, there is not enough information to answer this question.

Business

1 answer:

marusya05 [3.7K] · Answer 1 · 2026-03-28T16:45:38+03:00

Answer:

A. For the dividend, John incurred a cost of $0.00 since he was not listed as the shareholder of record by August 15th. As a result, the dividend allocation was made to the stock's former owner.

Explanation:

The settlement date refers to when the buyer officially takes ownership of the shares, typically occurring two days after the trade date.

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

It is August 14th and John has just purchased 100 shares of Cash Cow Inc. for​ $1,200 with a settlement date of August 16th. Cas

It is August 14th and John has just purchased 100 shares of Cash Cow Inc. for $1,200 with a settlement date of August 16th. Cas