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If you own 2000 shares of abc software

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On April 20, ABC Software declares a $2/share dividend to be paid on May 25 for all holders of record on May 18 (a Monday). Your brokerage account has been established with instructions to "dividend reinvest" your ABC Software cash dividends. No holidays are involved.

  • If you own 2000 shares of ABC Software that you bought last year, and the closing price for ABC Software on May 25 turns out to be $44.00, how many shares will be purchased for you on May 25th (assume no fees).
  • What if you bought 1000 more shares on May 13th? How many shares would you be able to purchase through the reinvestment plan now when the May 25th dividend pays? Explain your answer.

Reference no: EM132373592

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