I am reading some lecture notes on asset pricing, and they use the term "ex-dividend" price of an asset. I googled and found that ex-dividend means the time between announcement and payment of a dividend.

So, what does it mean by ex-dividend price? What does the word 'ex-" refer to?

Thank for your help in advance!


1 Answer 1


When a firm announces a dividend, it pledges to pay a given amount at a given date ($t_p$) to its stock holders. As traded shares may change hands frequently, the firm defines who has the right to claim the dividend as the shares owners at a given date ($t_e$), that usually is some date between the announcement date and the payment date. During the $t_e$ to $t_p$ period, the stock can trade, but its buyers won't have the right to receive the dividend, even though it hasn't been paid yet. This is why we say ex-dividend, because the share has no longer attached the right to claim the next dividend.


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