NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
A company announces a bonus issue of 1 share for every 4 shares held. An investor holds 200 shares. How many shares will the investor hold after the bonus issue is allotted?
The investor will hold 250 shares. A 1:4 bonus means one additional share for every four held, so 200 shares earn 50 bonus shares, taking the total holding to 250 shares after allotment.
- A210 shares
- B250 sharesCorrect
- C225 shares
- D400 shares
Explanation
A 1:4 bonus gives 1 new share for every 4 held. 200 / 4 = 50 bonus shares, so the total is 200 + 50 = 250. Choosing 210 or 225 comes from misapplying the ratio, and 400 would be a 1:1 bonus.
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