Are dividends between the declaration date of the dividend payment and the dividend pay date sold cum dividend or ex dividend?

• A. Ex dividend
• B. Cum dividend
• C. Interim dividend
• D. Special dividend

Answer: (A)

Dividends are characterized by cum-dividend up to the ex-dividend date, after which shares trade ex-dividend. The ex-dividend date is the point from which a new buyer no longer has the right to the declared dividend; the right remains with the seller who held the shares before that date. Since the pay date occurs after the ex-dividend date, any sale taking place after that date is ex-dividend, meaning the buyer does not receive the upcoming dividend. So, the dividends sold in the period between the declaration and the pay date are ex-dividend.