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Am I the only one getting really confused on 1 for 3 or 3 for 1 bonus/rights issues? I tend to get them the wrong way round everytime I read the question! Any tips?
Don’t get confused with these little words please!!
1 for 3 means that One new share for every three shares held…..therefore if you were holding say 10,000 shares, you will need to use the cross multiplication technique:
1 new shares= 3 shares held
? = 10,000 shares
therefore apply cross multiplication technique where you will have to multiply 1 by 10,000 and then divide by 3…..Likewise, if it is 3 for 1 means that 3 new shares for every 1 share held……. therefore if you were holding say 10,000 shares, you will need to use the cross multiplication technique as well:
3 new shares= 1 share held
? = 10,000 shares
therefore apply cross multiplication technique where you will have to multiply 3 by 10,000 and then divide by 1…..
It is just as simple as this!!
Hope this technique will make you comfortable!!!!
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