Hello,
I have a question regarding the ex-dividend date and I can’t seem to find a solid explanation anywhere. In the book it says that when a dividend goes into ex-dividend the stock price will drop by the amount of the dividend. Why is that?
Thank you!
If you buy the stock on Tuesday, you get the $2.00 dividend.
If you buy the stock on Wednesday, you don’t get the $2.00 dividend.
How do you think the Wednesday price will compare to the Tuesday price?
Check out MM Approach for stock valuation - It maybe of some help on this topic.