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

Mr. Iyer holds 500 shares of a company in his demat account on the record date for a 1:5 stock split (face value Rs 10 split into Rs 2). After the split, how many shares will his account show?

His account will show 2,500 shares. Splitting a Rs 10 face value share into Rs 2 shares gives five shares for each one held, so 500 times 5 equals 2,500. Total face value remains Rs 5,000, so only the number of shares changes.

  1. A100 shares
  2. B500 shares
  3. C2,500 sharesCorrect
  4. D1,000 shares

Explanation

A split of face value Rs 10 into Rs 2 gives 10/2 = 5 new shares for each old share. So 500 x 5 = 2,500 shares. Check: the total face value stays at Rs 5,000 (2,500 x Rs 2). The option of 100 divides instead of multiplying, which is a consolidation-type error.

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