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Cum dividend share price

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Cum dividend share price

  • This topic has 7 replies, 3 voices, and was last updated 4 years ago by planit.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • August 29, 2016 at 4:07 pm #336039
    Anuja Nair
    Member
    • Topics: 365
    • Replies: 353
    • ☆☆☆☆

    Hi sir, for the following question below how do work out the question when the amount of dividends due is not given ? So i cannot find the ex div share price.

    Qn: Compton plc has announced a 1 for 4 rights issue at subscription price of $2.50. The current cum-rights price of the shares is $4.10

    What is the new ex-div market value of the shares?

    Answer: $3.78

    August 29, 2016 at 7:52 pm #336085
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    There is not enough information to be able to answer the question!

    If it is from the BPP Revision Kit then tell me which number the question is.

    Otherwise I cannot help more.

    August 30, 2016 at 2:37 am #336135
    Anuja Nair
    Member
    • Topics: 365
    • Replies: 353
    • ☆☆☆☆

    No sir. This is all. I already typed the entire question here. This question is from my ACCA approved exam kit from Kaplan.

    The workings is as shown below, but i still don’t understand.

    New ex-div market value per share
    = (4 x $4.10+$2.50) /5
    = $3.78

    August 31, 2016 at 11:14 am #336514
    Anuja Nair
    Member
    • Topics: 365
    • Replies: 353
    • ☆☆☆☆

    Hi sir, i think you overlooked my previous post above.

    August 31, 2016 at 3:51 pm #336567
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Oops – I was thinking you had written that the cum div price was $4.10. Sorry!

    In fact it is the cum rights price, and we assume as always (unless told differently that it is ex div) and therefore the Kaplan answer is correct.

    Sorry about that 🙁

    September 1, 2016 at 2:20 am #336657
    Anuja Nair
    Member
    • Topics: 365
    • Replies: 353
    • ☆☆☆☆

    No worries sir. Thank you so much ?

    September 1, 2016 at 7:18 am #336715
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

    September 8, 2020 at 11:41 am #584055
    planit
    Participant
    • Topics: 0
    • Replies: 39
    • ☆

    Just to point out the obvious in case anyone else miss-reads the original statement like I and John did (and I missed it again even when reading this thread).

    The question says “cum-rights” it does NOT say “cum-div”

    So the share price given is with the rights to the share issue

    It doesn’t include anything to do with dividends so we assume that we can exclude dividends in the question.

    Note: Read the question properly!

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    Posts
Viewing 8 posts - 1 through 8 (of 8 total)
  • The topic ‘Cum dividend share price’ is closed to new replies.

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