What is Bonus Share Definition and Explanation

NCFM Training in Hyderabad: What is Bonus Share Definition & Explain

Stock Market: NCFM Training in Hyderabad

Definition of Bonus Share:

Bonus shares are additional shares given to the current shareholders without any additional cost, based upon the number of shares that a shareholder owns. These are company’s accumulated earnings which are not given out in the form of dividends, but are converted into free shares.

Bonus Share Description:

The basic principle behind bonus shares is that the total number of shares increases with a constant ratio of number of shares held to the number of shares outstanding.

Explanation of Bonus Share: if Investor A holds 200 shares of a company and a company declares 4:1 bonus, that is for every one share, he gets 4 shares for free. That is total 800 shares for free and his total holding will increase to 1000 shares.

Companies issue bonus shares to encourage retail participation and increase their equity base. When price per share of a company is high, it becomes difficult for new investors to buy shares of that particular company. Increase in the number of shares reduces the price per share. But the overall capital remains the same even if bonus shares are declared.

AS. CHAKRAVARTHY NCFM ACADEMY Hyderabad is the Best Institute for Stock Market NISM NCFM Training in Hyderabad,  NCFM Coaching in Hyderabad, Ameerpet, Telangana.

Keywords: Bonus Share, definition, NIFTY 50, NCFM Training in Hyderabad, NCFM Course in Hyderabad, AS Chakravarthy, NCFM Academy Hyderabad.

Sources: Economic Times


4.86/5 (7)

Please rate this

Spread the Word!

A S Chakravarthy NCFM Academy Hyderabad is reputed for its training delivery standards in the NISM & NCFM Classes in Hyderabad and most popular for Financial Markets, Capital Market, Derivative Market, Currency Market, Commodity Market, Fundamental Analysis and Technical Analysis Coaching in Hyderabad for Share Markets. a s chakravarthy NCFM Academy Hyderabad has imparted training to hundreds of batches and thousands of students since its inception and is considered to be monopoly institute in providing Mutual Fund Distribution Module NISM-Series 5-A, and NCFM Course Training in Hyderabad and The Oldest Institute Training on Stock Market Technical Analysis in Hyderabad Telangana for Trading & Investment : Skills, knowledge and career oriented practical training guidance to students, professionals and corporate organizations in Hyderabad. Especially his Technical Analysis Institute in Hyderabad for Professional Trading.