Question

A dividend is being paid to shareholders of record as of Wednesday, September 21. What is the last date that an investor can buy the shares cum dividend?    

A) September 16.
B) September 17.
C) September 18.
D) September 19.
E) September 20.

The term "information content effect" refers to the:     
A) Types of investors that are attracted to a stock because of the related tax effects.
B) Manner in which a stock dividend changes the equity accounts of the issuer.
C) Effect by the market to a firm's bankruptcy announcement.
D) Way in which shareholders are affected by a corporate reorganization.
E) Market's reaction to a change in the dividend payout

Answer 1

The settlement date of the stock is T+2 days.

So the investor should buy on T to have his name registered for the dividend.

T+2 = September 21
T= September 19.

Answer: D) September 19.

information content effect means Market's reaction to security's price because of some relevant information.

Answer: E) Market's reaction to a change in the dividend payout.