You purchased 500 shares of ABC stock on May 8. On May 16, you purchased another 200 shares and then on May 20 you purchased a final 100 shares of ABC stock. The company declared a dividend of $.94 a share on May 6 to holders of record on Friday, May 22. The dividend is payable on June 12. Assume it takes 2 business days to clear the transactions of ABC stock (i. e. T 2), how much dividend income will you receive on June 12

The dividend income received is $752

Explanation:

In this question, we are asked to calculate the amount of dividend income to be received on June 12 given that it takes two days to clear the transactions of ABC stock.

Firstly, we need to calculate the total number of shares bought. To do this, we simply add the shares bought on the dates May 8, May 16 and May 20. This is 500 + 200 + 100 = 800 shares

Hence we record that the number of shares is 800, with the dividend per share being 94 cents or $0.94

The Dividend receivable = No of shares * Dividend per share = 800 * $0.94 = $752

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