NISM Certifications · NISM-Series-XV: Research Analyst · Corporate Actions
Meridian Ltd has 10 crore shares of Rs 10 face value. It announces a 1:2 bonus issue (one bonus share for every two held). The pre-bonus market price is Rs 900. What is the theoretical post-bonus price, ignoring other effects?
The theoretical post-bonus price is Rs 600. Two shares worth Rs 1,800 become three shares after the 1:2 bonus, and since total value is unchanged, each share is worth Rs 1,800 divided by three, which is Rs 600.
- ARs 450
- BRs 600Correct
- CRs 675
- DRs 300
Explanation
Holder of 2 shares worth Rs 1,800 gets 1 bonus share, so holds 3 shares. Value unchanged at Rs 1,800, so price = 1,800/3 = Rs 600. Rs 450 would be a 1:1 bonus (halving the price).
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