Share Issues

Question 1

What is meant by the time apportioned method?

Answer 1

Month by month

Question 2

What’s a bonus issue?

Answer 2

Free shares given to existing shareholders

Question 3

What’s a rights issue?

Answer 3

Shares sold to existing shareholders at discounted price

Question 4

What do bonus issues and rights issues have in common?

Answer 4

Existing shareholders
New shares in proportion to existing share holdings

Question 5

Differences between rights issue and bonus issue?

Answer 5

Bonus are free
Rights are less than market value
Equity value changes for a rights issue but not a bonus issue
No funds are raised in a bonus issue
Bonus issues change the reserve

Question 6

How many shares has a business got if it has £500,000 share capital of 25p shares?

Answer 6

2,000,000 shares

Question 7

Business has £1,000,000 of 20p shares . Bonus issue of 1 for every 5 existing. What is the value of the bonus issue?

Answer 7

£200,000