Sovereign Ltd (SOV) declared a dividend of $0.40 on 10 March 2009. Sovereign's shares will go...

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Sovereign Ltd (SOV) declared a dividend of $0.40 on 10 March 2009. Sovereign's shares will go ex-dividend on 6 April 2009. It had previously declared a dividend on 14 September 2008. The share price, index and bond data around the time of the dividend declaration were as follows. Date Sovereign Stock Price ($) Index (pts) Accumulation 10 year Index (pts) Government Bonds (% p.a.) 2 March 2009 2.44 4320 10589 5.48 3 March 2009 2.42 4352 10659 5.44 4 March 2009 2.39 4299 10549 5.34 5 March 2009 2.41 4333 10660 5.41 6 March 2009 2.45 4358 10711 5.50 9 March 2009 2.66 4410 10854 5.49 10 March 2009 2.89 4450 10946 5.46 11 March 2009 3.20 4397 10835 5.47 12 March 2009 3.34 4431 10914 5.45 Market analysts have determined that the standard deviation of excess daily returns of SOV is 1.43%, whilst the standard deviation of the excess daily returns on the Index is 0.47% and the Accumulation Index is 0.48%. The coefficient of correlation between SOV and the Index is 0.64, whilst the coefficient of correlation between SOV and the Accumulation Index is 0.58. Sovereign Ltd (SOV) declared a dividend of $0.40 on 10 March 2009. Sovereign's shares will go ex-dividend on 6 April 2009. It had previously declared a dividend on 14 September 2008. The share price, index and bond data around the time of the dividend declaration were as follows. Date Sovereign Stock Price ($) Index (pts) Accumulation 10 year Index (pts) Government Bonds (% p.a.) 2 March 2009 2.44 4320 10589 5.48 3 March 2009 2.42 4352 10659 5.44 4 March 2009 2.39 4299 10549 5.34 5 March 2009 2.41 4333 10660 5.41 6 March 2009 2.45 4358 10711 5.50 9 March 2009 2.66 4410 10854 5.49 10 March 2009 2.89 4450 10946 5.46 11 March 2009 3.20 4397 10835 5.47 12 March 2009 3.34 4431 10914 5.45 Market analysts have determined that the standard deviation of excess daily returns of SOV is 1.43%, whilst the standard deviation of the excess daily returns on the Index is 0.47% and the Accumulation Index is 0.48%. The coefficient of correlation between SOV and the Index is 0.64, whilst the coefficient of correlation between SOV and the Accumulation Index is 0.58.

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To calculate the exdividend price of Sovereign Ltd SOV shares we need to consider the impact of the dividend on the stock price The exdividend price i... View the full answer