Equity Yield, Rights and Bonus Calculations
Dividend yield, theoretical ex-rights price and theoretical ex-bonus price.
How to prepare for CISI Introduction UK
Study to the syllabus version covering the exam date, learn instrument structures and calculations, then apply the introductory UK regulatory and advice boundaries without importing the deeper UK Financial Regulation unit.
Core concepts
Concept 1
Calculate and interpret share dividend yield.
Exam cue: Use the current market price with the annual dividend for yield.
Concept 2
Calculate a theoretical ex-rights price from the issue terms.
Exam cue: Weight old and new shares and cash consistently.
Concept 3
Calculate the theoretical price effect of a bonus issue.
Exam cue: Distinguish theoretical mechanical adjustment from later market movement.
Risk pitfalls and guardrails
Using nominal value as the yield denominator.
Guardrail: Check roles, ownership, cash-flow direction, units, version dates, protection limits and whether the option claims advice, authorisation or certainty that the facts do not support.
Ignoring the subscription cash in a rights calculation.
Guardrail: Check roles, ownership, cash-flow direction, units, version dates, protection limits and whether the option claims advice, authorisation or certainty that the facts do not support.
Treating a theoretical ex-price as a guaranteed traded price.
Guardrail: Check roles, ownership, cash-flow direction, units, version dates, protection limits and whether the option claims advice, authorisation or certainty that the facts do not support.
Memory anchors
Dividend yield
Annual dividend per share divided by the share's market price, expressed as a percentage.
Theoretical ex-rights price
The weighted theoretical share price after rights shares and subscription cash are combined.
Bonus issue
An issue of additional shares to existing holders without new subscription cash.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
A share pays an annual dividend of 24p and trades at £6.00. What is its dividend yield?
A company reports £9 million earnings attributable to ordinary shareholders and has 30 million ordinary shares. What is EPS?
Answer all questions to submit.
Next step personalized recommendations
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Move forward only after this module is stable.
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