We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- Corporate actions have an impact on stock prices.
- Dividends are a means of rewarding shareholders. The dividend is announced as a percentage of the face value.
- If you aspire to get the dividend, you must own the stock before the ex-dividend date.
- A bonus issue is a form of the stock dividend. This is the company’s way of rewarding the shareholders with additional shares.
- 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
- A rights issue is how the company raises fresh capital from the existing shareholders. Subscribe to it only if you think it makes sense
- Buyback signals a positive outlook of the promoters. This also conveys to the shareholders that the promoters are optimistic about the company’s prospects.