For stocks that pay dividends or bonds that pay coupons, the record date is the date, prior to such a payment, on which the list of owners is determined for the purpose of making the payment. Whoever owns the stock or bond at the close of trading on the record date will receive the upcoming payment.
A stock is said to trade ex-dividend if the transaction will not settle by the record date. This means that the upcoming dividend will be payable to the seller of the stock and not the buyer. The ex-dividend date is the date on which the stock starts to trade ex-dividend. Specific rules are set by the exchanges or market convention. On its ex-dividend date, the price of a stock usually falls by an amount approximately equal to the value of the upcoming dividend. If a stock trades before the ex-dividend date, but for some reason it fails to settle by the record date, the buyer still deserves the dividend. Arrangements must be made to ensure she receives it. The same concepts apply for bond trading, only the words ex-coupon and ex-coupon date apply.
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