EBK FUNDAMENTALS OF CORPORATE FINANCE
4th Edition
ISBN: 8220103631754
Author: Harford
Publisher: PEARSON
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Question
Chapter 17, Problem 1CC
Summary Introduction
Ex-Dividend: A stock dividend is treated as ex-dividend when company confirms the person to receive the payment of dividend.
Record Date: The date on which company decides to pay the dividend to its shareholders is called as the record date.
To determine:
The ex-dividend date and its significance.
Expert Solution & Answer
Explanation of Solution
The ex-dividend date is the date which is set two days before the record date. Any shareholder who buys the stock after ex-dividend date does not have any right to receive the dividend.
For example, if the record date of stock is 15 January 2018 then, its ex-dividend date will be two days before the record date that is 13 January 2018
The significance of ex-dividend date for the shareholders is:
- Investors who want to receive the dividend must purchase the stock three days before the record date.
- The ex-dividend date is set two days before the record date. Therefore, in order to receive the dividend investors need to have the stock one day before the ex-dividend date.
- If a shareholder buys the stock on the ex-dividend date then, that shareholder is not liable to receive the dividend.
Conclusion
Thus, a shareholder must purchase the stock one day before the ex-dividend date or three days before the record date to receive the dividend.
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Suppose that you are a U.S.-based importer of goods from the United Kingdom. You expect the value of the pound to increase against the U.S. dollar over the next 30 days. You will be making payment on a shipment of imported goods in 30 days and want to hedge your currency exposure. The U.S. risk-free rate is 5.5 percent, and the U.K. risk-free rate is 4.5 percent. These rates are expected to remain unchanged over the next month. The current spot rate is $1.90.
1.Move forward 10 days. The spot rate is $1.93. Interest rates are unchanged. Calculate the value of your forward position. Do not round intermediate calculations. Round your answer to 4 decimal places.
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Chapter 17 Solutions
EBK FUNDAMENTALS OF CORPORATE FINANCE
Ch. 17 - Prob. 1CCCh. 17 - Prob. 2CCCh. 17 - Prob. 3CCCh. 17 - Prob. 4CCCh. 17 - Prob. 5CCCh. 17 - Prob. 6CCCh. 17 - Prob. 7CCCh. 17 - Prob. 8CCCh. 17 - Prob. 9CCCh. 17 - Prob. 10CC
Ch. 17 - Prob. 11CCCh. 17 - Prob. 12CCCh. 17 - Prob. 1CQCh. 17 - Prob. 2CQCh. 17 - Prob. 3CQCh. 17 - Prob. 4CQCh. 17 - Prob. 5CQCh. 17 - Prob. 6CQCh. 17 - Prob. 1CTCh. 17 - Prob. 2CTCh. 17 - Prob. 3CTCh. 17 - Prob. 4CTCh. 17 - Prob. 5CTCh. 17 - Prob. 6CTCh. 17 - 7. Explain under which conditions an increase in...Ch. 17 - Prob. 8CTCh. 17 - Prob. 9CTCh. 17 - Prob. 1DCCh. 17 - Prob. 2DCCh. 17 - Prob. 3DCCh. 17 - Prob. 4DCCh. 17 - Prob. 5DCCh. 17 - Prob. 6DCCh. 17 - Prob. 7DCCh. 17 - Prob. 8DCCh. 17 - Prob. 1PCh. 17 - Prob. 2PCh. 17 - Prob. 3PCh. 17 - Prob. 4PCh. 17 - Prob. 5PCh. 17 - Prob. 6PCh. 17 - 7. Natsam Corporation has $250 million of excess...Ch. 17 - 8. Suppose the board of Natsam Corporation decided...Ch. 17 - 9. The HNH Corporation will pay a constant...Ch. 17 - Prob. 10PCh. 17 - Prob. 11PCh. 17 - Prob. 12PCh. 17 - Prob. 13PCh. 17 - 14. Assume perfect capital markets. Kay Industries...Ch. 17 - Prob. 15PCh. 17 - Prob. 16PCh. 17 - Prob. 17PCh. 17 - Prob. 18PCh. 17 - Prob. 19PCh. 17 - Prob. 20PCh. 17 - Prob. 21PCh. 17 - AMC Corporation currently has an enterprise value...Ch. 17 - FCF Co. has 20,000 shares outstanding and a total...Ch. 17 - Prob. 24PCh. 17 - Prob. 25PCh. 17 - Prob. 26P
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