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JAMB Commerce 2014 Question 34

Question 34

Stock Exchange

Cum div differs from ex div in that, the latter

  1. A.entitles the purchaser to receive a company's current dividend.
  2. B.entitles the vendor to receive a company's current dividend.
  3. C.confirms a purchase or sale made on behalf of a shareholder.
  4. D.is a document used to transfer ownership of shares.
Show the answer and explanation

Answer: B (entitles the vendor to receive a company's current dividend.)

Explanation

Ex div means 'without dividend': the buyer does not get the current dividend, so the vendor keeps it. Cum div gives it to the buyer.