Skip to content

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

Bharat Auto Ltd has a face value of ₹10 per share and announces a stock split into shares of face value ₹2 each. The shares were trading at ₹1,500 just before the record date. Ignoring market reaction, what is the approximate price per share after the split and the multiple of shares an investor receives?

The price becomes about ₹300 and the investor receives 5 shares for each one held. Splitting face value from ₹10 to ₹2 is a factor of five, and since total value is unchanged, the price falls from ₹1,500 to ₹300.

  1. A₹750 and 2 shares for each share held
  2. B₹300 and 5 shares for each share heldCorrect
  3. C₹1,500 and 5 shares for each share held
  4. D₹300 and 2 shares for each share held

Explanation

The split factor is 10 / 2 = 5, so each share becomes 5 shares. Market capitalisation is unchanged, so the price adjusts to 1,500 / 5 = ₹300. Option ₹1,500 ignores the price adjustment.

Did you get it right without looking?

One question tells you little. A timed set on Corporate Actions shows your real accuracy, how long you take and where you lose marks.

Practise Corporate ActionsFree diagnostic mock

More Corporate Actions questions