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What is a bonus?

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A bonus is when a company gives extra shares to its current shareholders for free. These bonus shares are given out based on the number of shares you already own.

Key Points about Bonus Shares:
  • Free Shares: You get these shares without paying anything extra.
  • Specific Ratio: They're given in a set ratio, like 1:2, meaning you get 1 bonus share for every 2 shares you own.
  • No Change in Investment Value: Your total investment value stays the same, but you have more shares, and the share price adjusts.
  • Purpose: Companies announce bonuses to reward shareholders and increase market liquidity.
Example: If you have 100 shares and the company announces a 1:1 bonus, you'll receive 100 more shares for free, doubling your total to 200 shares.
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