Fyatu wrote:COOP bank will soon issue a 1:5 bonus. What does this mean?? As a shareholder should i buy more or just sit back and gain more shares?? how will the bonus affect the share price..........will it go down further? Is bonus issue a share split?? Is it a rights issue.
Knowledgeable wazuans, please explain
A bonus issue is a payment to shareholders, who recieve shares that are a fraction of what they own.
A bonus issue is
not a share split and it is
not a rights issue.
All factors kept constant the share should go down to the equivalent amount of the bonus issue, in this case 1/5= 20%.
A bonus under normal conditions, all factors kept constant depresses the share price for a long time. Likely due to the dilution of EPS it causes.
Down to the current market rally, it is hard to know which direction the coop share will take, as it my remain high by being pulled by the market momentum. Or it may just behave in the typical way and tank for
months.
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