| Certainly, there are just so many factors | | | | at cheaper rate without splitting the stocks. Bonus |
| affecting share prices. For example, high oil prices, | | | | issue is also a good way to reward long term |
| interest rates, GDP and CPI to name few. | | | | stock investor. |
| However, many beginners are focusing too much | | | | Ideally, the share price drops the same ratio of |
| on the external factors than what can happen | | | | bonus issued. For instance, if the company is |
| from the accounting perspective. They can easily | | | | giving one new share for each four shares own |
| get frustrated from their own ignorance. | | | | by the shareholders, the share price will drop by |
| Therefore, before you think of getting cheated | | | | 20%. |
| next time, spend time to read this article very | | | | Warrants Exercise |
| carefully. | | | | With warrants, you have the right to buy shares |
| Dividend Effect | | | | from a company after the exercise date at |
| I love dividend as much as you do, but | | | | specified price. As a result, its earnings will be |
| apparently, it does not comes for free. Simply | | | | diluted as more shares are sharing the same |
| because, the share price drops in the same value | | | | earnings pie. In general, the share price drops the |
| as the dividend paid after the ex-date. For | | | | same proportion of the number of exercised |
| instance, if Wal-Mart Stores Inc. decided to | | | | shares. For example, if the exercised share is |
| distribute $1 per share as dividend to its | | | | 10% of the existing number of shares, the stock |
| shareholders, its share price will generally drops | | | | price will normally drops by 10% as well. |
| from $49 to $48 per share after the ex-date. | | | | Unfortunately, unlike stock split, these factors are |
| So, do not comment so much in the future if the | | | | diluting the earnings per share (EPS) of the stock, |
| stock price drops after the dividend payout, | | | | which in turn will adjust the share price |
| because you took the money away already. | | | | accordingly. That is why, the stock price will get |
| Bonus Issue | | | | affected if any of the events happen. Although |
| Bonus issue is additional shares given by the | | | | long term investors do not care much about it, |
| company to its existing shareholders. By doing so, | | | | stock traders (esp. swing traders, day traders, |
| the company is able to reinvest the dividend cash | | | | position traders) should consider these factors |
| for better earnings growth. In fact, this is another | | | | seriously. |
| way for the company to maintain its share price | | | | |