Explain the significance of each of the following:
a. announcement date
b. ex-dividend date
c. record date
d. payment date
Answer:
a. announcement date: Date at which the Board of Directors announces that a dividend will be paid.
b. ex-dividend: date Date after which the stock trades ex-dividend. Investors who buy the stock on or after the ex-dividend date do not receive the dividend. The previous owner does.
c. record date: Date on which the company examines its records to determine who is entitled to the dividend.
d. payment date: The date at which cash is actually distributed to eligible shareholders (those who purchased before the ex-dividend date.)
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On January 1, Year 1, Bottoms Up, Inc., issued $1,000,000 of 6%, 20-year bonds when the market rate of interest was 5%. The bonds pay interest annually on December 31. On its income statement for the year ended December 31, Year 1, Bottoms Up will show Interest Expense of ________.
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