Effect of Bonus Issue on Share Price
This query is : Resolved
A. Prithvi Surya
(Querist)
07 June 2011
Dear Experts,
When a listed company issues Bonus shares say in the ratio of 1:1 and suppose the Price of the Share in the stock market before Bonus Issue is500/-, does the share value in the stock market after the bonus issue become250/-??
Kindly explain the logic behind your answer....
Thanking you in advance
Prithvi
When a listed company issues Bonus shares say in the ratio of 1:1 and suppose the Price of the Share in the stock market before Bonus Issue is500/-, does the share value in the stock market after the bonus issue become250/-??
Kindly explain the logic behind your answer....
Thanking you in advance
Prithvi
07 June 2011
Cum bonus price indicates the value of one shre with bonus entitlement on it. While ex Bonus price is without the bonus entitlement on it. As such Ex-bonus price is less appx in the ratio of bonus declared.
07 June 2011
Cum bonus price indicates the value of one shre with bonus entitlement on it. While ex Bonus price is without the bonus entitlement on it. As such Ex-bonus price is less appx in the ratio of bonus declared.
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A. Prithvi Surya
(Querist)
07 June 2011
Sir then if the Ex-Bonus Price is approx to the bonus issue ratio, the advantage of getting Bonus shares is lost right????
07 June 2011
Benefit of Bonus goes to those who are invested for a number of days. It is not that a person invests for one day when it is cum-bonus and sells the other day when it is ex-bonus. If it would have been then every body would have invested in this fashion and earned a lot.
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