How is price adjusted after bonus share?

Bonus issues will create an increase in the supply of shares of the company in the market. This will result in a decreasing of the market price of the shares. Since there is a decrease in the market price of the shares after bonus issues, the prices of the shares have to be recalculated after every bonus issue is made.

When the price of a share is high, a number of retail investors may find it difficult to buy that share. By issuing bonus shares, the total number of shares of the firm increases, thus reducing its stock price and making it accessible to more investors.

How does dividend affect share price?

After the declaration of a stock dividend, the stock's price often increases. However, because a stock dividend increases the number of shares outstanding while the value of the company remains stable, it dilutes the book value per common share, and the stock price is reduced accordingly.