market price & dividend issue?

mohith · 1 market price & dividend issue? Thu Jul 28, 2011 1:18 pm

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normally why market prices decline after a dividend issue?

Kithsiri · 2 Re: market price & dividend issue? Thu Jul 28, 2011 3:42 pm

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mohith wrote:normally why market prices decline after a dividend issue?

I am unable to say it with 100 % certainty but "YES" I have seen it many a times in the past.
Can someone with more experience shed more light please?

sriranga · 3 Ex- Dividend Price Thu Jul 28, 2011 7:06 pm

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Investopedia explains Ex-Dividend
A stock trades ex-dividend on or after the ex-dividend date (ex-date). At this point, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock. After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend.

Kithsiri · 4 Re: market price & dividend issue? Thu Jul 28, 2011 8:21 pm

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sriranga wrote:Investopedia explains Ex-Dividend
A stock trades ex-dividend on or after the ex-dividend date (ex-date). At this point, the person who owns the security on the ex-dividend date will be awarded the payment, regardless of who currently holds the stock. After the ex-date has been declared, the stock will usually drop in price by the amount of the expected dividend.

Thanks for the explanation.

Fresher · 5 Re: market price & dividend issue? Thu Jul 28, 2011 8:55 pm

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mohith wrote:normally why market prices decline after a dividend issue?

which one are you referring to?

san1985 · 6 Re: market price & dividend issue? Thu Jul 28, 2011 9:13 pm

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mohith wrote:normally why market prices decline after a dividend issue?

Its quite rational for the market price to adjust according to dividends...

When a company announce a dividend market price will go up by that amount...

And on the ex-dividend date market price will come down by the dividend value(bcoz seller will have the right to dividend)..

But this is in theory...This may vary according to market imperfections and investor sentiments...

Hope this help..

2011_NewComer · 7 Re: market price & dividend issue? Thu Jul 28, 2011 9:14 pm

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mohith wrote:normally why market prices decline after a dividend issue?

You mean price going down on the XD date?

This is how I feel.... people buy that share few days before the dividend date on credit(or even for cash) if it is a good dividend. They do it just to get the dividend, not as an investment. So they want to sell it on XD date as they have got the dividend. So many trying to sell and not much buyers on XD date so price decline.
Also normally price goes up on the dividend date and 2, 3 days before that because of the high demand(not always, but if the market condition is good)..so i think it get adjusted on the XD date.

This is how I have seen in CSE. I may be wrong Smile