We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.

Key takeaways from this chapter

  1. Corporate actions have an impact on stock prices.
  2. Dividends are a means of rewarding shareholders. The dividend is announced as a percentage of the face value.
  3. If you aspire to get the dividend, you must own the stock before the ex-dividend date.
  4. A bonus issue is a form of the stock dividend. This is the company’s way of rewarding the shareholders with additional shares.
  5. A stock split is done based on the face value. The face value and the stock price change in proportion to the change in face value
  6. A rights issue is how the company raises fresh capital from the existing shareholders. Subscribe to it only if you think it makes sense
  7. Buyback signals a positive outlook of the promoters. This also conveys to the shareholders that the promoters are optimistic about the company’s prospects.

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