Bonus Issue
Dividends are paid to shareholders to distribute profits made by organization every year (or each quarter) in monetary terms. When such dividend are paid in terms of stock it is termed as 'Bonus Issue' . It is an organization's reward to the shareholder and are issued out of the reserves. Every shareholder receives these free shares in a certain ratio to the shares that he/she is currently holding. This ratio is announced by organization. If the ratio is 1:1 then the existing shareholder will get 1 additional share for every 1 share he/she holds in the organization at no additional cost. Similarly if the ratio is 1:2 then the existing shareholder will get 1 additional share for every 2 share he/she holds in the organization again at no additional cost . Consider a shareholder owns 100 shares of an organization which has announced bonus in ratio of 1:2 and is currently trading at Rs.300 . Current Value of Investment=100 shares*...