Understanding Stock Splits
Stock Splits
It might sound strange, but stock splits happen all the time in the markets. The stocks you own are actually split in half!
A stock split is like a bonus issue in that the number of shares owned goes up, but the value of the investment stays the same. What makes a bonus issue different from a stock split is that the face value of the company stays the same. But in a stock split, the face value changes. If the company has a face value of Rs.10 and there is a 1:2 stock split, the face value will change to Rs.5. You would have two shares now if you only had one before the split.
Like a bonus issue, a stock split lowers the value of each share to get more people to buy them. The timeline and dates (announcement date, ex-date, record date, etc.) are the same as for dividend and bonus problems.
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Table of Contents : Corporate actions and effect on stock prices 2. Dividends - portions of profits made by the company 3. The time line to understand the Dividend payment cycle |
