Basis of quotation
Basis of quotation is the basis upon which a security is traded, e.g. Ex Dividend. Securities generally trade on a ‘cum’ basis, i.e. the securities are entitled to upcoming dividends, rights issues, etc.
When the basis of quotation changes, the price of the security generally also changes. Shortly after a dividend is announced, the price of a security may rise by the same amount as the dividend. Once the security begins to trade ex dividend, the price usually drops by the dividend amount.
If ASX is trading at $15 and announces a dividend of 50 cents, the price may rise to $15.50. After ASX starts trading ex dividend, the price may drop by 50 cents.
Dividends, rights issues, and other changes in the basis of quotation are announced in ASX Trade, the financial pages of major newspapers and also to ASX via company announcements