Paylin Enterprises has declared a $3 dividend for its common stock. On the day before the ex-dividend

Question:

Paylin Enterprises has declared a $3 for its common stock. On the day before the ex-dividend date the firm’s shares are trading for $28 a share. What do you expect the price of Paylin’s shares to be on the day following the ex-dividend date? Why do you expect the stock price to change?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...