NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Public Offering / Corporate Actions
A company announces a bonus issue of 2 shares for every 5 shares held. Mr. Iyer holds 1,000 shares on the record date. How many shares will be credited to his demat account as bonus, and what will be his total holding?
He receives 400 bonus shares and holds 1,400 shares in total. A 2 for 5 bonus gives two new shares for each block of five held, so 1,000 shares yield 400 additional shares, which are added to the original holding.
- A200 bonus; 1,200 total
- B400 bonus; 1,400 totalCorrect
- C2,000 bonus; 3,000 total
- D400 bonus; 1,000 total
Explanation
Bonus ratio 2:5 means 2 new shares per 5 held: 1,000/5 x 2 = 400 bonus shares. Total holding is 1,000 + 400 = 1,400. Option with 200 uses 1 for 5; the option with 1,000 total ignores that the bonus shares are added to the existing holding.
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