Stock Split |
| Credit: Babson Thought & Action |
MEANING
• Stock Split is a corporate action in which the companies increase their number of shares without the change in the investment value
• Example
Let's assume the ratio of the split be- 5:1
EFFECTS OF STOCK SPLIT
• Stock Split increases the shares and decreases the price of an individual share
• This is usually announced by the companies when they are concerned that their share prices are too high
• Stock split makes the share price affordable as it decreases the price of an individual share
REVERSE STOCK SPLIT
• Reverse Stock Split is an action in which companies decrease the number of shares without the change in the investment value
• This is usually announced by the companies when they are concerned that their share prices are too low
• Reverse Stock Split is the opposite of a Stock Split
RECENT NEWS OF STOCK SPLIT
• Tata Steel Board announces 1:10 Stock Split and recommends A Rs 51 Per Share Dividend
• Amazon Board approves 20:1 Stock Split, $10 Billion Share Buyback plan
• HDFC Bank announces stock split in 1:5 ratio to attract more retail investors to its owner base
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