Instead of paying a cash dividend, a company might decide to go for a bonus issue of shares. It's a stock dividend allotted by the company to its shareholders out of the reserves of the company.Each existing shareholder of the company will get free shares against that they currently hold.One of the most important reasons why a company issues bonus shares is that it … [Read more...] about When and how bonus shares are issued to shareholders
Finance
When and why companies pay dividend
A company can pay a dividend to its shareholders out of profits made by the company during the financial year. A company can also pay dividend out of its cash reserve in case of loss or not having adequate profit to pay dividend. It's up to the management.Dividends are paid per share basis to the shareholders. It can be paid anytime during the financial year. If … [Read more...] about When and why companies pay dividend
Rights issue – All you need to know
The main purpose of the rights issue is to increase additional share capital from the existing shareholders. The company might take this path if they have decided not go public to raise additional capital.Existing shareholders can participate in the rights issue in the proportion of their shareholding. For example: if a company has decided to go for 1:2 rights … [Read more...] about Rights issue – All you need to know
Buyback of shares- All you need to know
Buyback is a corporate action in which a company invests in itself by buying back shares from the existing shareholders in the market. This process is also referred to as share repurchase.Buyback of shares reduces the company's outstanding shares from the market. When a listed company wants to buy back its own share, it publicly announces its intention to do so … [Read more...] about Buyback of shares- All you need to know
Deep in the Money
In the derivative market, deep in the money is an option contract that has a strike price significantly below or above the current market price of the underlying security.A deep in the money option contract is nearly all intrinsic value and minimal extrinsic value or time value. This means it has significant intrinsic value.You can calculate the intrinsic value of a … [Read more...] about Deep in the Money