Question: On April 4th Forex Corporation announced that it would pay
On April 4th, Forex Corporation announced that it would pay a dividend of $0.75 per share to all shareholders that were on record as of April 11th, with checks being mailed on April 21st. Determine what the stock price of Forex Corporation will be after the cash dividend announcement in a world of no taxes. Assume that the current price is $37.50 per share and that the price does not change between April 4 and April 21. On what day does the price change? What is the cost to a buyer after the announcement? What is the sales revenue to a seller after the announcement? Assume that stock settlements take 2 days.
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