- October 3, 2021 at 2:54 pm #636909johnbrianeMember
- Topics: 170
- Replies: 160
sir i went through this statement when reading the kaplan kit
“Cum dividend means the buyer of the share is entitled
to receive the dividend shortly to be paid ”
could you please explain what does it mean ..
specially the term “cum dividend”October 3, 2021 at 4:03 pm #636918John MoffatKeymaster
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‘cum’ means ‘with’. If you buy a share on the stock exchange (which is buying from another investor) then if it is cum div you will receive the next dividend.
However shortly before the dividend is paid, the company declares the shares to be ex div which means that the next dividend is paid to whoever owns the share on that date. So if you buy a share ex div you will not receive the dividend that is about to be paid (the previous owner will receive it).
This, and the effect it has on share prices, and the assumption we make in exam questions is all explained in my free lectures.
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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