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NISM Certifications · NISM-Series-XV: Research Analyst · Corporate Actions

A company announces a bonus issue in the ratio of 1:2 (one bonus share for every two held). An investor holds 1,000 shares before the record date. How many shares will the investor hold after the bonus allotment?

The investor will hold 1,500 shares. A 1:2 bonus gives one new share for every two held, so 1,000 shares earn 500 bonus shares, which added to the original 1,000 gives 1,500 shares after allotment.

  1. A1,200 shares
  2. B1,500 sharesCorrect
  3. C2,000 shares
  4. D3,000 shares

Explanation

A 1:2 bonus means 1 new share for every 2 held. 1,000 / 2 = 500 bonus shares, so the total is 1,000 + 500 = 1,500. Choosing 2,000 treats the ratio as 1:1, and 1,200 wrongly applies 1 for every 5.

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