Question

The dividend announcement by ABC Corporation contained the following dates:

May 01 - Declaration date
May 10 - Ex-date
May 12 - Record Date
May 25 - Payable Date
Your client purchased 1,000 shares on May 02 and sold 500 shares on May 10. He is entitled to receive dividends on how many shares of stock?

a. 0
b. 500
c. 1,000
d. 1,500

Answer 1

The correct answer is option c. 1,000.

Step-by-step explanation:

The client is entitled to receive dividends on the shares they own on the record date. Since the client purchased 1,000 shares on May 2 and sold 500 shares on May 10, the day the stock went ex-dividend, they still owned the shares on the ex-date.

Thus, the answer to how many shares the client is entitled to receive dividends on is 1,000 shares because the ex-date determines the entitlement to dividends, and anyone who owns the stock before that date is eligible for the dividend payout.