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What are the advantages of issuing bonus shares to the shareholders and creditors?The advantages of issuing bonus shares to the shareholders and creditors are as follows:-
1. Tax benefits : Bonus shares increase the wealth of shareholder when they receive dividend in cash.
2. Indication of higher future profits : company gives bonus only when its earning are expected to increase.
3. Increase in future dividend : more dividends in future to the shareholder will be given.
4. High psychological value: it tends to create greater demand for the company’s share in the market.
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