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Valuation of equity chapter

AFM

In illustration 13, Mr.A Can we write and assumption that, as 1 share held is not eligible for bonus and calculate everything for each year for 1 share instead of 1.2 share?

Lalit Sanpal

CA Final

★ 6K+

12-Mar-23 21:23

247

Answers (1)

NO ,the correct interpretation of the question is that for every 5 existing shares held in the company, a shareholder is entitled to receive 1 additional share. This entitlement is not limited to shareholders who hold 5 existing shares or multiples of 5 existing shares. Rather, every shareholder who holds any number of existing shares is entitled to receive 1 additional share for every 5 existing shares held. Therefore, assuming that Mr. X holds 0.2 Bous shares for every 1 share in the company (i.e., 1/5 of a share). by the way In US stock market we can invest in fractional shares also.