Series 7 practice questionhardEx-Dividend Dates — Scenario
A customer buys 100 shares of RST stock on Monday, March 9. The stock has a record date of Tuesday, March 10 for a $0.50 per share dividend. Under T+1 settlement, will the customer receive the dividend?
- AYes, because the trade settles on March 10, the record date✓ Correct answer
- BNo, because the trade settles on March 11, after the record date
- CYes, because dividends are paid based on trade date, not settlement date
- DNo, because the customer must hold the stock for at least 30 days to receive dividends
Explanation
Why A — Yes, because the trade settles on March 10, the record date
Under T+1 settlement, a trade executed on Monday, March 9 will settle on Tuesday, March 10, which is the record date. Since the buyer will be the registered owner on the record date, they are entitled to receive the $0.50 per share dividend. The ex-dividend date under T+1 settlement falls on the record date itself (March 10), so a purchase on March 9 (the business day before the ex-date) settles in time for the buyer to be the holder of record.
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