Steve purchased 300 shares of alpha beta stock on may 9. on may 15, he purchased another 200 shares and then on may 22 he purchased a final 400 shares of alpha beta stock. the company declared a dividend of $1.60 a share on april 30 to holders of record on friday, may 23. the dividend is payable on june 2. how much dividend income will steve receive on june 2 from alpha beta?
a. $0
b. $480
c. $800
d. $1,200
e. $1,440

Steve receive on June 2 from the dividends of Alpha Beta $800. The answer is C. $800

Explanation:

Hi, we need to take into account the definition of "ex-dividend date" which says that the ex-dividend date is normally two business days before the record date. If there is a purchase of any stock on or after its ex-dividend date (in our case May 22), the buyer will not receive the next dividend payment.

Since  Steve bought the last 400 shares 1 business day before the record date, the seller of those 400 shares gets the dividend, so, he gets to keep the dividends of 500 shares (the ones he bought in May 9 and May 15).

So, 500 shares * $1.60 = $800. That is the amount that Steve gets.

Best of luck.

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