Shareholders Who Exercise Their Entitlement to a Bonus Issue of Shares

question 46

Multiple Choice

Shareholders who exercise their entitlement to a bonus issue of shares, in theory, will:

• A)leave their wealth unchanged.
• B)reduce their proportional ownership in the company.
• C)increase their wealth.
• D)reduce their wealth.

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Definitions:

Financing Costs

Expenses incurred by a company in the process of raising capital through debts and/or equity, including interest payments and commissions.

Basic Overheads

The regular and necessary costs, such as rent and utilities, that are involved in operating a business.

Interest Charges

This is the cost incurred for borrowing money, typically expressed as a percentage of the principal loan amount.

Net Cash Flow

The difference between a company's cash inflows and outflows within a specified period, indicating its financial health.