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Posted by vikas on June 2, 2008, 8:22 am
Say a share CMP is 100 Rs and I have 100 share and if it gives bonus
1:1 then i will be having 200 share with market price of 50 Rs . So
my
holding will be the same . So, how am I benfitted ?
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Posted by Dave Dodson on June 2, 2008, 9:54 am
> Say a share CMP is 100 Rs and I have 100 share and if it gives bonus
> 1:1 then i will be having 200 share with market price of 50 Rs . So
> my holding will be the same . So, how am I benfitted ?
In the United States, this is called a "stock split." While it is true
that you don't benefit immediately because the value of your holdings
doesn't change with the split, it may be that the stock is more
affordable after the split, so trading volume goes up, increasing the
potential for future gains in value. For example, if the stock is
traded in lots of 100 shares, at 100 Rs, a potential buyer must be
willing to invest 10,000 Rs, but if the stock splits, the minimum
investment is reduced to 5,000 Rs.
Dave
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Posted by PeterL on June 2, 2008, 12:49 pm
> Say a share CMP is 100 Rs and I have 100 share and if it gives bonus
> 1:1 then i will be having 200 share with market price of 50 Rs . So
> my
> holding will be the same . So, how am I benfitted ?
>
>
The answer is you don't benefit financially.
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Posted by tex shalter on June 2, 2008, 4:05 pm
> The answer is you don't benefit financially.
Unless it pays dividend - they usually double
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Posted by joetaxpayer on June 2, 2008, 5:21 pm
tex shalter wrote:
>>The answer is you don't benefit financially.
>
>
> Unless it pays dividend - they usually double
Please cite at least two examples where a stock with a significant (more
than 2%, say) dividend, kept the dollar value of the dividend the same
after the split, thus doubling the yield upon splitting. I think what
you suggest is the exception, not the rule.
Joe
www.blog.joetaxpayer.com
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Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
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