Cum. and ex. - terms used in capital market authority, Finance Basics

Cum. And Ex. - Terms Used in Capital Market Authority         

These prefixes are written in front of other words as like capital, rights and dividends to qualify them."Cum" is short for cumulative, which means "inclusive of".  "Ex" on another hand is short for excluding; such is the opposite of including.

During commerce these terms refer to rights of sellers and buyers of securities while these are sold before a dividend has been affected although after it has been declared. These terms are required with the fact that shares are sold and bought throughout the year, however companies just declare dividends after the ending of their financial year when profits can be determined, and payment of dividends may obtain place long after moreover they have been declared.

Ex Rights cum Rights: The Term "Rights" refers to the decision via the directors to raise new share capital on current market rates however to provide a prior option to existing shareholders to purchase a fixed number of shares at preferential rates beneath market values. Ex and Cum proceeding it refers to the sale of shares decision, however before the dividend.

Thus "Ex Capital" infers such the seller of shares has sold them excluding their right to get a bonus share issue that has been declared at the time of sale. "Cum Capital" then so he sells them inclusive of its right. Cum Dividend: These terms simply mean that the sellers of shares retain his right to getting the dividend on the shares he sells although the title to the shares has passed to the buyer reserve:

P.S. "Cum" anything shares provide the buyer above par value since his purchase comes inclusive of the rights to collect upon prior earnings.  Therefore they are sold at higher prices than "Ex" shares.

Posted Date: 2/1/2013 1:49:27 AM | Location : United States

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