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) and the cum-bonus price is ₹360. Ignoring other factors, what is the theoretical ex-bonus price?
The theoretical ex-bonus price is ₹240. Two shares worth ₹720 become three shares after a 1:2 bonus, so total value is spread over more shares, giving ₹720 divided by 3. A bonus issue does not change total market value by itself.
- A₹180
- B₹240Correct
- C₹270
- D₹360
Explanation
Holding 2 shares worth 2 x 360 = ₹720 becomes 3 shares after the bonus. Ex-bonus price = 720 / 3 = ₹240. Check: 3 x 240 = 720. ₹180 wrongly treats the bonus as a 1:1 issue, and ₹360 ignores the adjustment.
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