Question

Leslie purchased 100 shares of GT stock on June 7th. Marti purchased 100 shares of GT stock on Monday, July 9th. GT declared a dividend on June 20th to shareholders of record on July 11th that is payable on August 1st. Which one of the following statements concerning the dividend paid on August 1st is correct given this information?A. Both Marti and Leslie are each entitled to one-half of the dividend amount. B. Neither Leslie nor Marti are entitled to the dividend. C. Leslie is entitled to the dividend but Marti is not. D. Marti is entitled to the dividend but Leslie is not. E. Both Marti and Leslie are entitled to the dividend.

Answer 1

Answer:

GT Stock

The correct statement concerning the dividend paid on August 1st is:

E. Both Marti and Leslie are entitled to the dividend.

Explanation:

a) Data:

June 7th, Leslie purchased 100 shares of GT stock

July 9th, Marti purchased 100 shares of GT stock

July 20th Dividend is declared (dividend declaration date)

July 11th = date of record for dividend payment

August 1st = date of dividend payment

b) Analysis: Both Leslie and Marti purchased shares of GT stock prior to the date of record.  The date of record is when note is taken of the stockholders who are entitled to dividend.  It is one of the three important dates concerning dividend.  The other dates are the declaration date and the payment date.