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What is the mechanicism that drops the price? Does the market automatically adjust the ask price? Or do buyers instantly start offering a lower price at tha
by venusenvy47 3y ago
What is the mechanicism that drops the price? Does the market automatically adjust the ask price? Or do buyers instantly start offering a lower price at that moment?
- quickthrowman 3y agoMarket makers drop the bid/ask by the ex-dividend amount immediately after it is announced, or arbitrageurs short the stock when the ex-dividend amount is announced and then they cover their short once the ‘overvalued’ stock they sold is back at fair value.
- atombender 3y agoIn the US, the price adjustment is done by the stock exchange itself; the price on open is adjusted exactly by the dividend amount. It's not some collective emergent behavior of the market. (I don't know what non-US exchanges do.)