Corporate Actions and Stock Prices

What are corporate actions?

• Financial initiatives undertaken by a company that result in a change to its stock price

• Actions taken by the government to regulate the stock market

• Strategies used by investors to manipulate stock prices

• Methods used by companies to hide their financial health

What are dividends?

• Portions of profits distributed to shareholders

• Payments made by shareholders to the company

• Fees charged by brokers for trading stocks

• Investments made by companies in new projects

How are dividends paid?

• Directly to the shareholder's bank account

• In the form of additional shares

• As a discount on future stock purchases

• Through physical checks sent by mail

When do companies choose not to pay dividends?

• When they want to reinvest profits for future growth

• When they want to reduce the number of shareholders

• When they want to increase the stock price

• When they want to attract new investors

What is the dividend payout ratio?

• The percentage of profits distributed as dividends

• The percentage of shareholders who receive dividends

• The percentage of shares owned by the company

• The percentage of dividends reinvested in the company

What is the purpose of a bonus issue?

• To reward shareholders with additional shares

• To increase the company's cash reserves

• To attract new investors to the stock

• To reduce the number of outstanding shares

How does a bonus issue affect the stock price?

• It declines in proportion to the bonus ratio

• It increases in proportion to the bonus ratio

• It remains unchanged after the bonus issue

• It fluctuates randomly after the bonus issue

What is the difference between a bonus issue and a stock split?

• In a bonus issue, additional shares are given for free, while in a stock split, the face value changes

• In a bonus issue, the face value changes, while in a stock split, additional shares are given for free

• A bonus issue and a stock split are the same thing

• A bonus issue and a stock split have no impact on the stock price

What is a rights issue?

• A way for the company to raise fresh capital from existing shareholders

• A method used by shareholders to sell their rights to buy shares

• A process where the company buys back shares from the market

• A strategy to prevent other companies from taking over

How does a rights issue work?

• Shareholders can subscribe to the rights issue in proportion to their shareholding

• Shareholders can subscribe to the rights issue at a fixed price

• Shareholders can subscribe to the rights issue for free

• Shareholders can subscribe to the rights issue only if they own a certain number of shares