Stock Split

A stock split occurs when a company releases additional stock in a structured manner without decreasing shareholder equity. For example in a 2 for 1 stock split, an investor who owns 100 shares of a stock valued at USD1 per share before the stock split will own 200 shares valued at USD0.50 per share after the split. After the stock split the investor owns twice as many shares, with each share worth exactly half as much as before the stock split. The purpose of a stock split is to reduce the share price of a stock in order to make the stock more affordable to a wider pool of investors.

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