Forum Archive Index - June 2000

["nick" <acummin@es.co.nz>]

       The price dosent drop for long, after a few weeks its back to its
normal level
         nick

> Jeremy, two words.  Fuzzy logic.  Unfortunately your worked example
 completely misses the totally obvious.
> > A payment of a dividend AUTOMATICALLY and ALWAYS drops the share price.
> Watch Telecom go ex-dividend on Tuesday and observe the share price.  All
> other things being equal the price of the share will drop by the amount of
> the dividend less tax.  Historically shares go ex-dividend at a price down
> 75% of the amount of the dividend.  Thus all things being equal when
Telecom
> goes ex-div the price of the share will fall by .75 x 11.5 cents.  The 75%
> amount will vary depending on the tax structures of the country concerned
> and the proportion of institutional investors vs small investors.
>
> If you'd like to rework your example I'd be happy to comment on it then.
>
> Oliver
>
>
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