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What is the main advantage of issuing bonus shares from a shareholder's point of view?
- a)Bonus shares provide immediate cash dividends to shareholders.
- b)Bonus shares have a fixed market price that does not fluctuate.
- c)Shareholders can convert bonus shares into cash by selling them at a higher price.
- d)Bonus shares come with reduced taxation compared to cash dividends.
Correct answer is option 'C'. Can you explain this answer?
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What is the main advantage of issuing bonus shares from a shareholder'...
Shareholders can choose to convert bonus shares into cash by selling them at a potentially higher market price.
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What is the main advantage of issuing bonus shares from a shareholder'...
Benefits of Issuing Bonus Shares to Shareholders:
Benefit of Increased Value:
- When a company issues bonus shares, it increases the total number of shares held by shareholders without requiring them to make any additional investment.
- This effectively increases the shareholders' ownership stake in the company without diluting their control.
- As a result, the value of each existing share increases, leading to a potential increase in the overall wealth of shareholders.
Option to Convert into Cash:
- Shareholders have the option to convert their bonus shares into cash by selling them in the market at a higher price.
- If the market price of the bonus shares is higher than the original price at which they were issued, shareholders can realize a profit by selling the shares.
- This provides shareholders with a way to access cash without the need for the company to pay out dividends.
Taxation Benefits:
- Bonus shares come with reduced taxation compared to cash dividends.
- When shareholders receive cash dividends, they are typically subject to taxes such as dividend tax.
- In contrast, when shareholders receive bonus shares, they are not immediately subject to taxes as they have not received any cash.
- This can result in tax deferral benefits for shareholders, allowing them to potentially defer taxes until they sell the bonus shares for cash.
In conclusion, the main advantage of issuing bonus shares from a shareholder's point of view is the option to convert them into cash by selling them at a higher price, along with the potential tax benefits compared to cash dividends.
Benefit of Increased Value:
- When a company issues bonus shares, it increases the total number of shares held by shareholders without requiring them to make any additional investment.
- This effectively increases the shareholders' ownership stake in the company without diluting their control.
- As a result, the value of each existing share increases, leading to a potential increase in the overall wealth of shareholders.
Option to Convert into Cash:
- Shareholders have the option to convert their bonus shares into cash by selling them in the market at a higher price.
- If the market price of the bonus shares is higher than the original price at which they were issued, shareholders can realize a profit by selling the shares.
- This provides shareholders with a way to access cash without the need for the company to pay out dividends.
Taxation Benefits:
- Bonus shares come with reduced taxation compared to cash dividends.
- When shareholders receive cash dividends, they are typically subject to taxes such as dividend tax.
- In contrast, when shareholders receive bonus shares, they are not immediately subject to taxes as they have not received any cash.
- This can result in tax deferral benefits for shareholders, allowing them to potentially defer taxes until they sell the bonus shares for cash.
In conclusion, the main advantage of issuing bonus shares from a shareholder's point of view is the option to convert them into cash by selling them at a higher price, along with the potential tax benefits compared to cash dividends.
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What is the main advantage of issuing bonus shares from a shareholder's point of view?a)Bonus shares provide immediate cash dividends to shareholders.b)Bonus shares have a fixed market price that does not fluctuate.c)Shareholders can convert bonus shares into cash by selling them at a higher price.d)Bonus shares come with reduced taxation compared to cash dividends.Correct answer is option 'C'. Can you explain this answer?
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What is the main advantage of issuing bonus shares from a shareholder's point of view?a)Bonus shares provide immediate cash dividends to shareholders.b)Bonus shares have a fixed market price that does not fluctuate.c)Shareholders can convert bonus shares into cash by selling them at a higher price.d)Bonus shares come with reduced taxation compared to cash dividends.Correct answer is option 'C'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about What is the main advantage of issuing bonus shares from a shareholder's point of view?a)Bonus shares provide immediate cash dividends to shareholders.b)Bonus shares have a fixed market price that does not fluctuate.c)Shareholders can convert bonus shares into cash by selling them at a higher price.d)Bonus shares come with reduced taxation compared to cash dividends.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the main advantage of issuing bonus shares from a shareholder's point of view?a)Bonus shares provide immediate cash dividends to shareholders.b)Bonus shares have a fixed market price that does not fluctuate.c)Shareholders can convert bonus shares into cash by selling them at a higher price.d)Bonus shares come with reduced taxation compared to cash dividends.Correct answer is option 'C'. Can you explain this answer?.
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What is the main advantage of issuing bonus shares from a shareholder's point of view?a)Bonus shares provide immediate cash dividends to shareholders.b)Bonus shares have a fixed market price that does not fluctuate.c)Shareholders can convert bonus shares into cash by selling them at a higher price.d)Bonus shares come with reduced taxation compared to cash dividends.Correct answer is option 'C'. Can you explain this answer?, a detailed solution for What is the main advantage of issuing bonus shares from a shareholder's point of view?a)Bonus shares provide immediate cash dividends to shareholders.b)Bonus shares have a fixed market price that does not fluctuate.c)Shareholders can convert bonus shares into cash by selling them at a higher price.d)Bonus shares come with reduced taxation compared to cash dividends.Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of What is the main advantage of issuing bonus shares from a shareholder's point of view?a)Bonus shares provide immediate cash dividends to shareholders.b)Bonus shares have a fixed market price that does not fluctuate.c)Shareholders can convert bonus shares into cash by selling them at a higher price.d)Bonus shares come with reduced taxation compared to cash dividends.Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
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