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

Meera holds 500 shares of a company. The board declares a bonus issue in the ratio 3:5 (3 bonus shares for every 5 held). The pre-bonus market price is Rs 800. Ignoring any market reaction other than the mechanical adjustment, what is the ex-bonus price and her total shareholding?

She will hold 800 shares at an ex-bonus price of Rs 500. A 3:5 bonus gives 300 extra shares on 500 held, and since her holding value of Rs 4,00,000 is unchanged by a bonus, dividing it by 800 shares gives Rs 500 each.

  1. ARs 500 and 800 sharesCorrect
  2. BRs 500 and 300 shares
  3. CRs 480 and 800 shares
  4. DRs 533 and 800 shares

Explanation

Bonus shares = 500 x 3/5 = 300, so total holding = 800. Total value 500 x 800 = Rs 4,00,000 is unchanged, so the price = 4,00,000/800 = Rs 500. Check: 800 x 5/8 = 500. Rs 480 is not derived from any consistent working.

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