Question

You own 210 shares of stock in Halestorm, Inc., that currently sells for $82.90 per share. The company has announced a dividend of $3.20 per share with an ex-dividend date of February 4. Assuming no taxes, what is the value of the stock on February 4?

a. $8290
b. $86.10
c. $79.70
d. $7865

Answer 1

$82.90

Step-by-step explanation:

Generally, the price of a share will fall by the amount of the dividend on the ex dividend day. The aim is to ensure that the value of the stock is maintained. Therefore, the amount at which the stock will open on the ex dividend day can be calculated as:

Market price per share (MPS) on February 4 = $82.90 - $3.20 = $79.70

With the payment of $3.20 per share, the value of the share will be:

The total value of the stock on February 4 = $79.70 = $3.20 = $82.90

Therefore, the value of the stock on February 4 is $82.90.

Note: There seems to be a typographical error in the option a. in the question. It should be the answer if corrected.