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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Public Offering / Corporate Actions

A company declares a stock split reducing the face value of its shares from Rs 10 to Rs 2. An investor holds 500 shares in her demat account on the record date. After the corporate action is processed, how many shares will she hold?

She will hold 2,500 shares. A split from Rs 10 to Rs 2 face value turns every share into five shares, so 500 shares become 2,500, while the total value of her holding stays unchanged by the split.

  1. A100 shares
  2. B500 shares
  3. C2,500 sharesCorrect
  4. D5,000 shares

Explanation

Each Rs 10 share becomes 10/2 = 5 shares of Rs 2. So 500 x 5 = 2,500 shares. Holding 100 shares results from dividing instead of multiplying, and 5,000 would result from a 1:10 ratio. The total value of the holding is unchanged by the split.

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