Final answer:
The value of your portfolio on May 3, based on the number of shares and current stock price plus the dividends, would be $18,608.70. If the stock price drops by the dividend amount on the ex-dividend date, then the portfolio's value would be $16,503.30, corresponding to answer option A.
option a is the correct
Step-by-step explanation:
To calculate the value of your portfolio on May 3 after the dividend has been announced by Green Mild Chili Peppers, Incorporated, you multiply the number of shares you own by the current stock price and then add the total value of the dividends you will receive. With 330 shares at $53.20 per share, the stock value is 330 shares × $53.20 per share = $17,556.00. However, since the dividend is $3.19 per share, the total dividend value will be 330 shares × $3.19 per share = $1,052.70.
On the ex-dividend date, the value of the stock typically drops by the amount of the dividend because new buyers on or after this date will not receive the dividend. Even so, for the purpose of calculating the portfolio's value, we do not adjust the stock price as we are focused on your holdings and the dividends you will receive.
Therefore, the value of the portfolio on May 3, considering both stock value and dividend payout, without adjusting the stock price for the decrease after the dividend payment, is the stock value plus the dividend value: $17,556.00 (stock value) + $1,052.70 (dividend value) = $18,608.70.
Since this option is not available in the multiple choices provided, you might want to check with your instructor or the source of the problem for clarification. However, if we were to consider the value drop because of the dividend payment, we would have to subtract the dividend value from the stock value, resulting in $16,503.30 (stock value after dividend drop) which corresponds to answer option A.