In practice,there may be an increase in the share price following the announcement by a company of a forthcoming bonus issue.Which of the following is a likely explanation of this phenomenon?
A) Companies tend to increase their total dividend payout following a bonus issue.
B) Bonus issues create wealth for shareholders.
C) Bonus issues reduce the debt/equity ratio and,therefore,the riskiness of the firm.
D) Bonus issues increase the dividend payout ratio of companies.
Correct Answer:
Verified
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