Cum div differs from ex div in that; the later?

A. entitles the purchaser to receive a company’s current dividend
B. entitles the vendor to receive a company’s current dividend
C. confirms a purchase or sale made on behalf of a shareholder
D. is a document used to transfer ownership of shares

Correct Answer:

Option A – entitles the purchaser to receive a company’s current dividend

Explanation

Cum dividend is the status of a security when a company is preparing to pay out a dividend at a later date. The seller of a stock cum dividend is selling both the right to the share and the right to the next dividend distribution.

The ex-dividend date of a stock is the day on which the stock begins trading without the subsequent dividend value.