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NISM Certifications · NISM-Series-XV: Research Analyst · Corporate Actions

Aarav holds 1,000 shares of a company. The company announces a bonus issue in the ratio 3:5 (3 bonus shares for every 5 held). The cum-bonus price is Rs 800. What is the theoretical ex-bonus price?

The theoretical ex-bonus price is Rs 500. Five shares worth Rs 4,000 become eight shares after a 3:5 bonus, so the value is spread over more shares, giving Rs 4,000 divided by 8, which equals Rs 500 per share.

  1. ARs 500Correct
  2. BRs 480
  3. CRs 600
  4. DRs 533.33

Explanation

Holding 5 shares worth 5 x 800 = Rs 4,000 becomes 8 shares after bonus. Ex-bonus price = 4,000 / 8 = Rs 500. Check: Aarav's 1,000 shares become 1,600 and 1,600 x 500 = Rs 8,00,000, equal to the original value. Rs 480 wrongly uses a different ratio, and Rs 600 ignores the full bonus quantity.

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