How does a Bonus Issue theotrically impact the share price?(1.0 Marks)It Increases The Share PriceAIt Decreases The Share PriceBNo Impact On Share PriceCIt Doubles The Share Price

A bonus issue theoretically has no direct impact on the share price (Option C). Here's why:

1. A bonus issue is essentially a distribution of additional shares to existing shareholders, proportional to the shares they already own. This is done by capitalizing part of the company's retained earnings or reserves.

2. While the number of shares increases, the total market capitalization (the total value of all shares) remains the same because the issue of bonus shares does not involve any cash inflow/outflow.

3. Therefore, the price per share decreases to adjust for the increased number of shares while keeping the total market capitalization constant.

4. However, this does not mean that the value of the company has decreased. The shareholder still owns the same proportion of the company as before, it's just that it's now divided over more shares.

5. So, while the share price decreases, the overall value of the shareholder's investment remains the same. Hence, there is no direct impact on the share price due to a bonus issue.

It's important to note that this is a theoretical explanation. In reality, a bonus issue can have indirect effects on the share price due to market psychology and other factors.