Dividends & Key Dates
Distributions of corporate earnings — cash or additional stock — declared by the board; the sequence of dates runs declaration, ex-dividend, record, and payable.
The classic SIE item hands you a calendar and asks which trade date still captures the dividend — the tell is the settlement clue. With T+1 settlement, a regular-way buy on the business day before the record date settles in time and qualifies (some older question banks still hinge on the retired T+2 rule, where the ex-date fell one business day before the record date). A trickier variant asks who must “fund” a dividend on shares sold around the ex-date — answer: short sellers, since the short seller owes the dividend to the lender of the borrowed shares.
Don’t confuse the four dates with split or stock-dividend mechanics: a cash dividend lowers price by the dividend amount; a forward split or stock dividend lowers price proportionally (a 2-for-1 halves it) without an ex-date settlement trap. Memory hook: “buy before the X” — once the X (ex) is crossed, the dividend is gone. Also recall who owns each date: the board declares, sets the record date, and pays; the exchange/FINRA sets the ex-date.
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