In practice, there may be an increase in the share price following the announcement by a company of a forthcoming bonus issue. Which of the following is a likely explanation of this phenomenon?

Select one:

a.Companies tend to increase their total dividend payout following a bonus issue.

b.Bonus issues create wealth for shareholders.

c.Bonus issues reduce the debt/equity ratio and, therefore, the riskiness of the firm.

d.Bonus issues increase the dividend payout ratio of companies.