Ex-dividend Date

What is the correct chronological order of the four dividend dates?

1. A.Record, declaration, payable, ex-dividendThis scrambles the sequence entirely; declaration always comes first and payable last.
2. B.Declaration, record, ex-dividend, payableThe ex-date comes before (or on) the record date, not after it.
3. C.Ex-dividend, declaration, record, payableNothing precedes the declaration date; the board must declare the dividend first.
4. D.Declaration, ex-dividend, record, payableCorrect — this is the DERP order the four dates always follow.

Why: The sequence is declaration date, ex-dividend date, record date, and payable date. The board declares, the stock goes ex, the books are checked, and the cash is paid.

On the ex-dividend date, a stock's opening price is typically:

1. A.UnchangedA buyer on the ex-date is no longer entitled to the coming dividend, so the shares are worth measurably less. An unchanged open would mean the market took no notice of cash about to leave the company.
2. B.Set to zeroA dividend is a small fraction of share value, not the whole of it. Pricing the stock at zero would say the corporation paid out its entire worth, which no ordinary dividend does.
3. C.Reduced by about the dividend amountCorrect - price adjusts down by the dividend.
4. D.Increased by the dividend amountRight size, wrong direction. Cash leaving the corporation and the buyer losing the dividend entitlement both push value down, so the ex-date adjustment is a reduction rather than an increase.

Why: The price usually opens lower by roughly the amount of the dividend on the ex-date.

The ex-dividend date is the:

1. A.First day a buyer is not entitled to the dividendCorrect - buy on/after ex-date, no dividend.
2. B.Record dateThese two dates sit next to each other and are easily swapped. The record date is when the issuer inspects its books to see who owns the shares; the ex-date is the trading cutoff that determines who will be on those books in time.
3. C.Day the board declares the dividendDeclaration opens the sequence, creating the obligation and announcing both the amount and the later dates. The ex-date comes afterward and settles who qualifies, not whether a dividend exists at all.
4. D.Day the dividend is paidPayment is the final event, when the cash actually reaches holders. Entitlement was locked in earlier, so the payable date decides nothing about who receives the money.

Why: The ex-dividend date is the first day on which a buyer of the stock is NOT entitled to the declared dividend.

On a mutual fund's ex-dividend date, the NAV is:

1. A.DoubledNothing about a distribution doubles the share price. The fund is handing assets to shareholders, so the value left inside the portfolio can only go down, and the size of the drop is set by the size of the payout.
2. B.Increased by the distribution amountThis confuses receiving a distribution with the fund's own accounting. The shareholder's total position is unchanged, but that is because cash arrives to offset the drop; the money paid out has left the portfolio, so NAV falls by the per-share amount rather than rising.
3. C.UnaffectedThis treats the distribution as if it came from somewhere other than the fund's assets. It does not: the payout is carved out of the portfolio, which is why buying shares to capture an upcoming distribution gains the investor nothing and is a prohibited sales practice.
4. D.Reduced by the distribution amountCorrect - NAV drops by the distribution.

Why: On the ex-date, NAV is reduced by the per-share distribution amount.