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What is and when to do a stock split?
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Weicong Sng RJ: Park Min Young CO: Psychotic Nutcase Post Rating: 0 + / - Total Posts: 59 Karma: 28 Joined: Apr 10, 2012 |
Posted on Apr 24, 2012 I just want to clarify if "2 for 1" means splitting ALL my shares from say 100m shares at $5 each to 200m shares at $2.50 each.What is so good about a stock split? Sorry I just don't see it... I am asking this because my shares are at $50 per share right now and it NEVER seems to drop. |
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Andrew Turner RJ: Thomas Lazygun Post Rating: 0 + / - Total Posts: 44 Karma: 26 Joined: Apr 9, 2012 |
Posted on Apr 25, 2012 Splitting a stock makes very little difference to the company. For an investor, it's psychologically easier to spend $10,000 on a thousand shares than to spend it on a single share. Further, having spent that $10,000 on a single share, if you suddenly need to find $5000 in a hurry the only way to do it is to liquidate your entire shareholding. So a high stock price discourages investors: probably only a little but the effect is there. Stock splitting is simply a mechanism to prevent the price of an individual share spiralling up into the stratosphere.
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