NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
A company declares a bonus issue of 1 share for every 2 held. A share closed at ₹450 just before the ex-bonus date. Ignoring other factors, what is the expected ex-bonus price?
The expected ex-bonus price is ₹300. A 1:2 bonus turns every two shares worth ₹900 into three shares, and since total value is unchanged, each share is worth ₹900 divided by three, which is ₹300.
- A₹225
- B₹300Correct
- C₹450
- D₹350
Explanation
Two shares worth 900 become three shares, so the price = 900/3 = ₹300. Bonus issue does not change total value. ₹225 would apply to a 1-for-1 bonus, and ₹450 ignores the dilution.
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