You own 230 shares of stock in Green Mild Chili Peppers, Inc., that currently sell for $50.70 per share. The company has announced a dividend of $2.59 per share with an ex-dividend date of May 3. Assuming no taxes, what is the value of your portfolio on May 3

The value of the portfolio ex-dividend is $ 11,065.30

Explanation:

On May 3, when the stock would have gone ex-dividend, it is expected that the share price would be marked down by the value of dividend paid, hence the portfolio should now be valued at ex-dividend price

The ex-dividend price = share price before dividend-dividend

share price before dividend is $50.70

ex-dividend is $2.59

ex-dividend price=$50.70-$2.59

=$48.11

Value of portfolio=number of shares*ex-dividend price

number of shares is 230

value of portfolio=230*$48.11

=$ 11,065.30

This equals $12,256.70 (230 x $50.70 + 230 x $2.59)

Explanation:

The value of the portfolio on May 3 is the sum of the market value of the shares plus the sum of the returns in form of dividends to be received.

This value adds the weight of the investment obtained by multiplying the total shares held with its market price to the expected dividend returns on the given date.