This module is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.
Lesson 3 of 5 · 11 min
Reading the price change on the ex-dividend date
On the ex-dividend date a share's price change is the dividend coming off, plus the move of the market that day, plus whatever is specific to the company; separating the three shows what the dividend alone did.
In short
- The gap between the ex-dividend date and the record date equals the settlement period: with two-day settlement, the ex-date is two business days before the record date.
- Observed price change on the ex-date = −dividend + market change + company-specific change.
- In percentages: dividend effect = ; market effect = the index return that day (assuming the stock moves one-for-one with the market).
- The company-specific part is what is left after removing the other two.
- Buying just before the ex-date to collect the dividend does not make money on average: the price falls by the dividend, and only market moves remain.
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