Your colleague has 200 shares in Grisham PLC. He has just received a letter sent on behalf of the company informing him that the company has decided to issue 1 for 8 bonus shares for its shareholders and that for his 200 shares he will get an additional 25 shares as a bonus for no charge. The shares are traded at £12 each on LSE. Your colleague is excited that he is going to get shares worth £250 for free. Explain to him how a bonus issue works and whether the value of his holding in Grisham PLC has gone up.