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Ex dividend date

Ex dividend date Definition

The ex dividend date, also known as the reinvestment date, is a finance term referring to the first day of the ex-dividend period. It was introduced to allow all pending transactions to be finished before the record date. An investor must own the stock before the ex-dividend date to be eligible for the dividend payout. When the market opens on the ex-dividend date, the exchanges automatically decrease the price of the stock by the amount of the dividend. This is done because a dividend payout decreases the value of the firm as it comes from the company's reserves. Otherwise, a buyer on or after the ex dividend date would have to absorb that fall in value, because the seller gets the dividend.





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