Do not reduce (DNR),
Definition of Do not reduce (DNR):
A do not reduce (DNR) order is a type of order with a specified price that does not get adjusted when the underlying security pays a cash dividend. Since a cash dividend reduces the assets of the company and transfers that wealth to the shareholder, the stock will drop by the amount of the dividend, all else being equal. Therefore, brokers adjust orders to reflect this change. If the order is tagged as DNR, the price on the order will not be altered to account for the dividend payment.
Investors who use good ‘til canceled (GTC) orders must be aware that their order’s specified price will be reduced with the distribution of cash dividends. The reduction of a GTC order's specified price is a market practice that helps to keep the order price in line with the market’s activity.
Instructions to a broker not to reduce the limit price by the amount of cash dividend (on the ex-dividend date) on a stock under a limit order to buy, or a stop order/stop limit order to sell.
How to use Do not reduce (DNR) in a sentence?
- A do not reduce order keeps the specified price on an order, instead of the order price being reduced by the amount of a cash dividend on the ex-dividend date.
- Reducing GTC order prices by the amount of the dividend on the ex-dividend date is standard practice by brokers in the stock market.
- Good 'till canceled order prices are typically reduced by the amount of the cash dividend on the ex-dividend date.
Meaning of Do not reduce (DNR) & Do not reduce (DNR) Definition