RFC Corp. has announced a $2.17 dividend. If RFC\'s price last price cum-dividen

Question

RFC Corp. has announced a $2.17 dividend. If RFC's price last price cum-dividend is $23.74, what should its first ex-dividend price be (assuming perfect capital markets)?

RFC's first ex-dividend price should be $________(Round to two decimal places.)

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Explanation / Answer

Answer

RFC's first ex-dividend price should be (23.74-2.17) =21.57

ex-dividend price should drop by exactly the dividend payment ie (23.74-2.17)   =21.57

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