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______ shares are issued free of cost to existing equity shareholders. - Secretarial Practice

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Question

______ shares are issued free of cost to existing equity shareholders.

Options

  • Bonus

  • Right

  • Equity

MCQ
Fill in the Blanks
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Solution

Bonus shares are issued free of cost to existing equity shareholders.

Explanation:

Bonus shares are issued as gift to equity shareholders. These shares are issued free of cost to existing equity shareholders. These are issued out of accumulated profits. Bonus shares are issued in proportion to the shares held. Thus capital investment of (ordinary) equity shareholder tends to grow on its own. This benefit is available only to the equity shareholder.

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Sources of Owned Capital - Shares
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Chapter 2: Sources of Corporate Finance - Exercises [Page 34]

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Balbharati Secretarial Practice [English] Standard 12 Maharashtra State Board
Chapter 2 Sources of Corporate Finance
Exercises | Q 1. A) 5. | Page 34
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