What is the difference between Bonus, Splits and Rights Shares?
What is the difference between Bonus, Splits and Rights Shares?
Bonus Shares
Bonus shares are additional free shares issued to the shareholder by the company. Profitable Companies in India issue Bonus Shares. These are additional shares issues given the shareholder without any cost to existing shareholders. (Rights Issue of a share is not free)
Rights Issue
Rights issues are the shares issued by a company only to its existing shareholders which will be cheaper than the current market price of that company share.
What is Stock Split?
Stock split is the process of splitting shares with high face value into shares of a lower face value. It’s like getting an Rs.20 note changed for two Rs.10 notes. The value changes of neither note nor splitted stock.
Effect of stock split
A stock split increases the number of shares in a public company. The price is adjusted such that the market capitalization of the company almost remains same.