ABC corporation announces a 5:4 stock split to holders of record on Wednesday, November 15th, payable on November 30th. NASDAQ has set the ex date at December 1st. What is the first day that the stock will trade without a due bill attached?
Business · High School · Mon Jan 18 2021
Answered on
In a stock split scenario, a "due bill" is a financial instrument that reflects the right to receive additional shares due to the split.
The due bill attaches to the stock from the record date until the ex-date. On the ex-date, the stock trades without the right to receive additional shares from the split. So, the first day that the stock will trade without a due bill attached is the ex-date.
In this scenario, NASDAQ has set the ex-date at December 1st. Therefore, December 1st is the first day that the stock of ABC corporation will trade without a due bill attached after the stock split.