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Finance Dictionary and Glossary of Investment Terms
The first day of the ex-dividend period. The reinvestment date was created to allow all pending transactions to be completed before the record date. If an investor does not own the stock before the reinvestment date, he or she will be ineligible for the dividend payout. Further, for all pending transactions that have not been completed by the reinvestment date, the exchanges automatically reduce the price of the stock by the amount of the dividend. This is done because a dividend payout automatically reduces the value of the company (it comes from the company's cash reserves), and the investor would have to absorb that reduction in value (because neither the buyer nor the seller are eligible for the dividend). also called ex-dividend date.