If a corporation declares a 5% stock dividend payable on a specific date, when is the ex-date for this stock dividend?

When a corporation declares a stock dividend, the ex-dividend date is set to determine which shareholders are entitled to receive the dividend. The ex-date is typically one business day before the record date.

In this case, if the stock dividend is declared and the payable date is set, the record date will be the date that shareholders must be on the books as owners of the stock to receive the dividend. The ex-date, falling one day prior to the record date, ensures that any shares sold before this date do not qualify the seller for the dividend.

For the stock dividend declared with an announcement prior to the payable date, the correct ex-date would be B: Tuesday, October 2, if the record date is set for October 3. This ensures that shareholders who buy the stock on or after this ex-date will not receive the stock dividend because they will not be the registered owners on the record date.

This knowledge is pivotal for investors and traders as it affects trading strategies and investment decisions surrounding dividend payments. Familiarity with the sequence of dividend declaration, record dates, and ex-dates allows investors to navigate dividend stocks more effectively.