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. The company announces a stock split from face value Rs 10 to Rs 2 per share. How will his holding appear after the corporate action is processed?
Mr. Iyer will hold 2,500 shares of face value Rs 2. The split ratio is 10 divided by 2, which is 5, so 500 shares become 2,500 shares, and the total face value remains Rs 5,000.
- A500 shares of face value Rs 2
- B100 shares of face value Rs 10
- C2,500 shares of face value Rs 2Correct
- D2,500 shares of face value Rs 10
Explanation
The split ratio is 10/2 = 5, so each share becomes 5 shares. 500 x 5 = 2,500 shares of Rs 2 each, and the total face value stays Rs 5,000 (2,500 x 2). Option 2 of 500 shares at Rs 2 would reduce the total face value, which is wrong.
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