Question

To determine the shareholders entitled to receive the upcoming dividend, the exchange define the ex-dividend date as the_____business days preceding the date of record.

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Answer 1

The ex-dividend date is set as the two business days before the date of record, and it determines which shareholders are entitled to receive the declared dividend. Dividends are a distribution of a company's profits, and decisions on paying them are made by the company's management or board of directors.

Step-by-step explanation:

To determine the shareholders entitled to receive the upcoming dividend, the exchange defines the ex-dividend date as the two business days preceding the date of record. This means that investors must own the stock before the ex-dividend date to be eligible for the dividend payment. When a company pays a dividend, it is distributing a percent of the profits to its shareholders. The amount each shareholder receives is based on the number of shares they own. For instance, if a stock pays a dividend of 75 cents per share, an investor holding 85 shares would receive a dividend payment.

Decisions regarding issuing stock, paying dividends, or reinvesting profits are made by the company's management or board of directors. Specifically, public companies usually make such decisions during board meetings, considering various factors like company performance, financial health, and strategic growth plans. Conversely, private firms may have different processes, often influenced by fewer shareholders and less regulatory oversight.