Genevieve Wood -

A situation where a shareholder ends up with more shares, but the total value of the shareholding remains the same.

Example: a four for one split of a $10 share would result in four $2.50 shares in place of each $10 share.

A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector. The primary motive is to make shares seem more affordable to small investors even though the underlying value of the company has not changed. This has the practical effect of increasing liquidity in the stock.



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