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How does the issuance of bonus shares impact the market capitalization of a company?
  • a)
    It increases the market capitalization.
  • b)
    It decreases the market capitalization.
  • c)
    It has no effect on the market capitalization.
  • d)
    It doubles the market capitalization.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
How does the issuance of bonus shares impact the market capitalization...
The issuance of bonus shares has no effect on the market capitalization of a company. Market capitalization is determined by multiplying the market price per share by the total number of outstanding shares. When bonus shares are issued, the number of shares increases, but the market price per share decreases proportionally. Therefore, the overall market capitalization remains the same.
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