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Hello Chris,
when calculating the weighted average shares for right issues, why do we apply the bonus factor to only previously issued share and not to shares after the right issue?Hi,
This is because after the bonus issue has taken place the total number of shares has increased by the number of shares issued, hence no requirement to apply the fraction.
The fraction is being applied prior to the issue to take account of the free element of shares issued. Once the shares have been issued this is already taken into account.
Thanks
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