NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Public Offering / Corporate Actions
A client holds 600 shares of a company in demat form. The company announces a stock split reducing face value from Rs 10 to Rs 2 per share. What will be the client's holding after the split is processed?
The client will hold 3,000 shares. Face value falls from Rs 10 to Rs 2, so each share becomes five shares, and 600 shares become 3,000. The depository replaces the old ISIN holding with the new one, and the total value stays unchanged.
- A120 shares
- B600 shares
- C3,000 sharesCorrect
- D1,200 shares
Explanation
Split factor = 10 / 2 = 5 new shares for each old share. 600 x 5 = 3,000 shares. Total value of holding is unchanged because the price adjusts proportionately. 120 comes from dividing instead of multiplying.
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