Stock market is a medium to exchange the shares between the public.When the company got initiated it need some capital SEBI will allow the company to get investment from public with some conditions. The company provide the face value and the share available based on the capital they required. After that if any of the share holder need money after some period and if the the company is not ready to provide that back he can exchange the shares with others in a medium called Stock Exchange.
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Hi sir,
Answering to your question 1 :: How Bonus and split didn’t effect the share price?
Bonus/Split doesn’t affect the value of your holdings because in bonus/split, the number of shares outstanding increases and the market price per share will decrease in the same proportion.
Example:
Consider your total outstanding shares are 10 at a market price of Rs.100 and the total market value is (10*100) Rs.1000
If Stock split/bonus is 2 to 1 {For every one share you will be given another share}
Your total outstanding shares now will be 20 but the total market value will not be changed because the market price drops immediately to Rs.50.
The total market value is still remains the same after bonus/split (20*50) Rs.1000
Hi Vignesh,
It may not effect the value of holding but it will effect the share price right.