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Why do we have to subtract forthcoming dividend from cum dividend when getting ex dividend, I have failed to understand it.. Pliz help
If someone buy a share when it is cum div, then they will pay for the share but then receive the dividend. If someone buys it when it is ex div, then they will not get the next dividend. So they will pay more when it is cum div, by the amount of the dividend.
I do explain this in my free lectures. The lectures are a complete free course for Paper F9 (now Paper FM) and cover everything needed to be able to pass the exam well.
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