Generally, management undertakes a bonus share issue to:
A) send a signal to investors that the company is expected to perform poorly.
B) increase the liquidity of shares by decreasing the number of share available.
C) increase the liquidity of shares by increasing the number of share available.
D) reduce the administrative costs associated with investor relations.

Question

Quizplus · Accepted Answer

Bonus share issue increases the liquidity of shares by increasing the number of share available. This is because bonus shares are issued to shareholders at no cost, which increases the total number of shares outstanding. This can make the shares more affordable for small investors and improve trading activity. A bonus share issue is usually a signal of good financial health and future growth prospects, rather than poor performance. It can also help reduce the administrative costs associated with investor relations by reducing the number of shareholders who hold small numbers of shares.

Generally, Management Undertakes a Bonus Share Issue To