Autumn Term Flashcards
1
Q
What is a bonus issue?
A
A bonus issue is an issue of additional shares to existing shareholders in proportion to their shareholding. They are a free issue of shares and thus a capitalisation of company reserves.
2
Q
What is a rights issue?
A
A rights issue is an issue of shares to existing shareholders in proportion to their shareholding at a price that is normally lower than the current market price of the share.
3
Q
What is the fundamental difference between a bonus issue and a rights issue?
A
Fundamental difference - Rights issue raises additional cash for the business whereas a bonus issue does not.
