If a company offers a one-for-five bonus issue and the current share price cum-bonus is $7.50,the theoretical value of each share ex-bonus is:

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Quizplus · Accepted Answer

A one-for-five bonus issue means for every five shares owned, a shareholder receives one additional share for free. This dilutes the share value. If the cum-bonus price is $7.50, after the bonus issue, the shareholder has 6 shares. The total value of these shares is 5 * $7.50 = $37.50. Dividing this total by the new number of shares (6) gives the ex-bonus price: $37.50 / 6 = $6.25.

If a Company Offers a One-For-Five Bonus Issue and the Current