Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

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Prepare for the Investment Company and Variable Contracts Products Principals Exam with our interactive quiz. Master key concepts with multiple choice questions designed to enhance your understanding and boost your confidence for the Series 26.

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Which of the following terms relates to the first day a purchaser is ineligible to receive a distribution?

Record date
Payable date
Ex-date
Effective date

The correct answer is: Ex-date

The term that relates to the first day a purchaser is ineligible to receive a distribution is known as the ex-date. On the ex-date, the stock begins trading without the value of its next dividend or distribution. This means that if an investor buys the stock on or after the ex-date, they will not receive the upcoming dividend; only those who owned the stock before this date are entitled to the distribution. It's essential for investors to understand the significance of the ex-date in dividend investing. Knowing when a stock goes ex-dividend allows investors to make informed decisions about their purchases if they wish to benefit from dividend payments. The other terms—such as record date, payable date, and effective date—refer to different aspects of the dividend process, but do not specifically denote when a new purchaser loses the right to receive a distribution.