NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
A company announces a bonus issue in the ratio 1:2 (one bonus share for every two held). The cum-bonus share price is ₹300. Ignoring other factors, what is the theoretical ex-bonus price?
The theoretical ex-bonus price is ₹200. Two shares worth ₹600 in total become three shares after a 1:2 bonus, and total value is unchanged, so the price falls to ₹600 divided by 3, which is ₹200.
- A₹150
- B₹200Correct
- C₹250
- D₹100
Explanation
Holding 2 shares worth 2 x 300 = ₹600 becomes 3 shares after the bonus. Ex-bonus price = 600/3 = ₹200. Check: 3 x 200 = 600. ₹150 wrongly assumes a 1:1 bonus adjustment of half, ₹250 and ₹100 do not preserve total value.
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