SIE practice questionmediumDividends
On the ex-dividend date, what adjustment typically occurs to the stock's price?
- AIt is unaffected
- BIt increases by the amount of the dividend
- CIt decreases by the amount of the dividend✓ Correct answer
- DIt is halved
Explanation
Why C — It decreases by the amount of the dividend
On the ex-dividend date, the stock price drops by the dividend amount as new buyers are not entitled to the dividend. Prices do not rise, stay unaffected, or halve due to dividends.
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