Question

Your portfolio is 240 shares of Callahan, Inc. The stock currently sells for $94 per share. The company has announced a dividend of $2.50 per share with an ex-dividend date of April 19. Assuming no taxes, what is your portfolio value as of April 19

Answer 1

240*94=22560

Step-by-step explanation:

Just regularly calculate the portfolio, don't try to do any fancy thing.

Answer 2

$21,960

Step-by-step explanation:

the value of the portfolio before the ex-dividend date = $94 x 240 stocks = $22,560

Generally when investors are expecting a dividend, they will pay a higher price for a stock just before the ex-dividend date. After the stockholders' eligible for the dividend are recorded (ex-dividend date), the seller of the stock will receive the dividend, so the stock's sales price will decrease by the dividend amount.

New price per stock at ex-dividend date = $94 - $2.50 = $91.50

the value of the portfolio at the ex-dividend date = $91.50 x 240 stocks = $21,960