You purchased 200 shares of ABC stock on July 15^th. On July 20^th, you purchased another 100 shares and then on July 21^styou purchased your final 200 shares of ABC stock. The company declared a dividend of $1.10 a share on July 5^thto holders of record on Friday, July 23^rd. The dividend is payable on July 31^st. How much dividend income will you receive on July 31^stfrom ABC?

A) $0
B) $220
C) $330
D) $440
E) $550

Question

Joshua Roberts · Accepted Answer

Final Answer : C, Explanation :  The correct answer is C. $330. The dividend was declared on July 5th, so you are only entitled to dividends on the shares you owned on that date. You purchased 200 shares on July 15th, so you will receive dividends on those shares. You purchased another 100 shares on July 20th, but those shares were not purchased until after the record date, so you will not receive dividends on those shares. You purchased your final 200 shares on July 21st, but those shares were also purchased after the record date, so you will not receive dividends on those shares either. Therefore, you will receive dividends on 200 shares, which will total $330 ($1.10 per share x 200 shares = $330).

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