Q.The shares which are offered to the existing shareholder at free of cost is known as ______.

Shares offered to existing shareholders free of cost are bonus shares, so the correct option is (b).

Among capital market instruments:

• Bonus shares are additional shares given free of cost to existing shareholders in proportion to their holding, by capitalising the company's accumulated profits and reserves. No money is collected from the shareholders.
• Right shares are also offered to existing shareholders first, but they must be paid for (usually at a favourable price). …