Question

write disadvantage of issue of bonus shares?​

Answer 1

Disadvantages of Issue of Bonus Shares:

Rate of dividend decline: The rate of dividend in future will decline sharply, which may create confusion in the minds of the investors.

Speculative dealing: It will encourage speculative dealings in the company's shares.

Forgoes Cash equivalent: ...

Lengthy Procedure:

Answer 2

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• Bonus issue allows the company to conserve cash for reinvesting back into the business. It has a signaling effect and gives a positive sign to the market that company believes in its long-term growth stor