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

A company with a face value of Rs 10 announces a stock split into shares of face value Rs 2. Ms. Rao holds 300 shares on the record date. A DP executive processes the corporate action. Which outcome is correct?

Her holding becomes 1,500 shares of Rs 2 each, and the total face value stays at Rs 3,000. The split factor is ten divided by two, which is five, so shares multiply fivefold while the aggregate face value is unchanged.

  1. AHer holding becomes 1,500 shares of Rs 2 each, with total face value unchanged at Rs 3,000Correct
  2. BHer holding becomes 1,500 shares, with total face value rising to Rs 3,000 from Rs 600
  3. CHer holding remains 300 shares, each now worth Rs 2
  4. DHer holding becomes 60 shares of Rs 2 each

Explanation

Split factor = 10/2 = 5, so 300 x 5 = 1,500 shares. Total face value before = 300 x 10 = Rs 3,000; after = 1,500 x 2 = Rs 3,000, unchanged. Option 60 shares divides instead of multiplying; the other options misstate face value.

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