Investment Glossary
Stock Split -
A corporate mandated decision to increase the number of outstanding shares
issues by the company without effecting the equity currently owned by its
investors.
For example, if a company currently issues 1,000,000 shares of stock and
does a 2-1 split, if you currently own 1000 shares worth $50,000, you now own
2000 shares worth the same $50,000.
Stock Splits are typically done by companies where their stock prices have
risen beyond what is normal for their industry in an effort to make stock
prices seem more affordable for investors. Often, immediately after a stock
split, stock prices will see a steady increase.
