What is meant by stock split?
A company increases the number of shares that are
outstanding by issuing more shares to existing shareholders.
For example, in a
2-for-1 stock split, every shareholder holding one share is given an additional
share. In such a case, the face value of the share is reduced (say from ` 10 to
5 per share).
Companies stock's price is also affected by a stock split. After a split, the
stock price of the company reduces since the number of outstanding shares
increases, however the market capitalization remains the same.
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