Stock Split
EFFECTS OF STOCK SPLIT
Introduction
The purpose of this research paper is information retrieval regarding stock split practice in a modern stock market, its major reasons and valuation effects on the company's financial position.
According to the definition stock split is a method commonly used to lower the market price of a firm's stock by increasing the number of shares belonging to each shareholder. Companies are able to split their stocks in any number of ways. The most common stock splits are, 2-for-1, 3-for-2 and 3-for-1. For example, if you own 100 shares of a company that trades at $100 a share and it declares a 2-for-1 stock split, you will own a total of 200 shares at $50 a share after the split. It is also possible to have a reverse stock split: a 1-for-10 means that for every ten shares you own, you get one share.
In spite of the fact that theoretically stock split has insignificant effect on the firm's capital structure and value of what shareholders own, many......
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Approximate Word Count: 1979
Approximate Pages: 8 (250 words per double-spaced page)
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