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For the exam, the share price is ex-dividend when they have just paid a dividend.
If they are about to pay a dividend then the share price will be higher by the amount of the dividend, and is a cum dividend price.You need to know it in the exam for two reasons. You can be asked to value shares, using the formula on the formula sheet, and the formula gives the ex dividend share price.
Also you can be asked to calculate the cost of equity, and we need to use the ex div price in the calculation.I do suggest that you watch our free lectures on this.
Our free lectures are a complete course for Paper F9 and cover everything needed to be able to pass the exam well.Thank you so much for your reply. Now it is much clear. I appreciate your support. I will watch the lectures again for assurance. Thank you again Mr. John.
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