Understand the basics of Bonus Share. Bonus share meaning and concept. Simple definition with examples. #bonusshare #market #stockmarket #share #markets #capitalmarket #companies #stocks #business #finance #stakeholders #shareholders

1. What is a bonus share?
From time to time, companies issue bonus
shares instead of dividends.
As the name suggests, bonus shares are
extra shares that the company awards to
shareholders.
Typically, bonus shares are issued in ratios,
say 4:1. So, for every share held by an
investor, the company gives four extra
shares.

2. After a bonus issue, the market price of the
stock reduces proportionately.
For example, after a 4:1 bonus issue, the
price of a share that was initially trading at
₹1,000 will reduce to ₹200.
Companies issue bonus shares to make the
stock seem more affordable to investors.