SIE Exam Question 65: Answer and Explanation

Question: 65

Which of the following terms can be described as the day the decision is made by the corporation's board of directors to provide the common stockholders with a dividend?

• A. Declaration date
• B. Record date
• C. Ex-dividend date
• D. None of the above

Correct Answer: A

Explanation:

The declaration date is the date when the board of directors declares the decision to pay out a dividend to common stockholders of record. The record date is when investors must be officially recorded as stockholders on stock certificates in order to qualify for receipt of the declared dividend. The ex-dividend date is the first day that the stock trades without the declared dividend attached and, accordingly, will not be given to anyone purchasing the stock as of this date or after.