Canadian Securities Course (CSC) Practice Exam

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What happens on the ex-dividend date?

  1. Shareholders receive dividends

  2. Dividends are reinvested

  3. One day before the record date

  4. Dividends are not assigned to new shareholders

The correct answer is: Dividends are not assigned to new shareholders

On the ex-dividend date, dividends are not assigned to new shareholders. This means that any investors who purchase shares on or after the ex-dividend date will not receive the upcoming dividend payment. Instead, the previous owner of the shares will receive the dividend. This is why option A, shareholders receiving dividends, is incorrect. Option B, dividends being reinvested, is also incorrect as dividends are not reinvested on the ex-dividend date. Option C, one day before the record date, is incorrect because the record date and the ex-dividend date are two separate dates. The ex-dividend date is usually set one business day before the record date.

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