Need help with a practice exam question

FINRA FINRA SIE
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Nevermind. Delete if you would like.

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I assume you figured it out @Scottyswans. If you have any lingering questions, let me know :slight_smile:

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So the ex date for cash trades is the day after the record date? If someone sold shares on Thursday and the record date was monday, it would record and the new owner would receive the dividend?

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Regular way settlement is MUCH more important than cash settlement. Make sure you know the following about it:

  • Regular way settlement is T+2
  • Must settle as owner by record date to get the dividend
  • Ex-date is always one business day prior to the record date
    • If buying on the ex-date, investor does NOT get the dividend (will not settle in time)
    • If selling on the ex-date, investor keeps the dividend

To answer your second question - yes! An investor selling on Thursday would be taken off the books by Monday, and therefore would not get the dividend. The investor that bought those shares would get it.

To answer your first question - yes! Here’s the same snippet from above, but for cash settlement:

  • Cash settlement is same day
  • Must settle as owner by record date to get the dividend
    • Can buy the stock on the record date and receive dividend (same day settlement)
  • Ex-date is always one business day after to the record date
    • If buying on the ex-date, investor does NOT get the dividend (will not settle in time)
    • If selling on the ex-date, investor keeps the dividend
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