STOCK SPLIT Meaning and
Definition
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A stock split refers to the process wherein a company divides its existing outstanding shares into multiple shares, increasing the total number of shares available. This division is usually carried out by lowering the nominal or face value of each share without altering the overall value of a shareholder's investment. The purpose of a stock split is to make shares more affordable and increase liquidity in the market.
In a stock split, the number of shares held by existing shareholders is proportionally increased, while the stock price is proportionally reduced. For instance, in a two-for-one stock split, an investor holding one share will receive an additional share, effectively doubling the number of shares owned, while the price per share will be halved.
Companies decide to undergo a stock split to make their shares more attractive to investors, particularly retail investors who may find it difficult to invest in high-priced stocks. By reducing the share price, a stock split increases accessibility for a wider range of investors. Additionally, a stock split can enhance market liquidity, as more shares become available for trading.
It is important to note that a stock split does not change the total market capitalization or the ownership percentage of shareholders. Although the total number of shares increases, the individual value of each share decreases proportionally. Therefore, a stock split is often considered a cosmetic change that does not impact the fundamental value of the company.
Common Misspellings for STOCK SPLIT
- atock split
- ztock split
- xtock split
- dtock split
- etock split
- wtock split
- srock split
- sfock split
- sgock split
- syock split
- s6ock split
- s5ock split
- stick split
- stkck split
- stlck split
- stpck split
- st0ck split
- st9ck split
- stoxk split
Etymology of STOCK SPLIT
The word "stock split" has a straightforward etymology, as it is derived from the combination of the words "stock" and "split".
The term "stock" refers to shares or ownership in a company. It originates from the Old English word "stoc", which means a stake or trunk of a tree. Over time, its meaning expanded to include the ownership shares in a business.
The word "split" comes from the Middle English word "splitten", derived from the Old English word "splettan", which means to cleave or divide. In the context of stocks, a split refers to dividing the existing shares of a company into multiple shares.
When combined, "stock split" simply means the division or splitting of a company's shares into multiple shares, usually resulting in a lower per-share price while maintaining the overall market value of the shares.
Similar spelling words for STOCK SPLIT
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