Monday, January 16, 2017 12:05:35 AM
"The stock price is lowered by the dividend amount prior to the market open"
That is nonsensical the way it is written. How exactly is a price lowered BEFORE market open? The MARKET is what determines a share price by EXECUTED TRADES, not some arbitrary number determined by someone before a market open. It just so happens that the market factors in a dividend into the trade pricing WHEN the market opens...and the ex-dividend is the first day it trades without the dividend.
As for his comment that trades don't need to be settled. Hogwash. You might want to ask him WHY it is the exdividend date is set TWO days before the Record date? Just for laughs?
The answer is quite simple, since it takes three days to settle, the last day in which a stock trade would be eligible for a dividend is THREE days before the Record day to allow for settlement....thus the ex-dividend day (the first day without the dividend) is TWO days before the record day. There is no other reason the ex-dividend date is set two days before the record date.
Someone there doesn't know what they are talking about.
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