![]() ![]() ![]() In this example, shareholders who’ve already purchased and been issued shares of Company A’s stock would be given another share for every stock they already own. To understand the concept better, let’s look at an example:Ĭompany A has decided to split its stock and has settled on the most common split ratio: 2-for-1. However, the most common are 2-for-1, 3-for-1, and 3-for-2 splits. There are a variety of combination ratios open to the company. When a company decides to split its stock, it determines the ratio for the split. A stock split is a decision by the company to increase the number of outstanding shares by a specificied multiple. Publicly-traded companies all have a given number of outstanding shares of stock in their company that have been purchased by and issued to investors. ![]()
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