Question

You own 310 shares of stock in a firm that currently sell for $55 per share. The company has announced a dividend of $3.20 per share with an ex-dividend date of May 3. Assuming no taxes, what is the value of your portfolio on May 3

Answer 1

Answer:

The value of your portfolio on May 3 is $16,058.

Explanation:

Since it is assumed that there is no tax, the value of a share on ex-dividend date is the current share per share minus the announced dividend per share share. Therefore, we have:

Price per share on ex-dividend date = Current share per share - Announced dividend per share share = $55 - $3.20 = $51.80

Therefore, the value of your portfolio on May 3 which is the ex-dividend date can be calculated as follows:

Portfolio value on May 3 = Number of shares owned * Price per share on ex-dividend date = 310 * $51.80 = $16,058

Therefore, the value of your portfolio on May 3 is $16,058.