{"id":15911,"date":"2023-10-16T10:14:23","date_gmt":"2023-10-16T04:44:23","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=15911"},"modified":"2025-04-03T21:04:56","modified_gmt":"2025-04-03T15:34:56","slug":"stock-split","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/stock-split\/","title":{"rendered":"What is a Stock Split?"},"content":{"rendered":"<h2><strong>About Stock Split:<\/strong><\/h2>\n<ul>\n<li>A stock split\u00a0<strong>happens when a company increases the number of its shares<\/strong> to boost the stock&#8217;s liquidity.<\/li>\n<li>It is a corporate action in which a company\u00a0<strong>issues additional shares to shareholders<\/strong>,\u00a0<strong>increasing the total by the specified ratio<\/strong> based on the shares they held previously.<\/li>\n<li>Although the\u00a0<strong>number of shares outstanding increases<\/strong>, there is\u00a0<strong>no change to the company&#8217;s total market capitalization<\/strong> as the\u00a0<strong>price of each share will split as well.<\/strong><\/li>\n<li>The most<strong> common split ratios<\/strong>\u00a0<strong>are 2-for-1 or 3-for-1<\/strong> (sometimes denoted as 2:1 or 3:1).\u00a0 This means that\u00a0<strong>for every share held before the split<\/strong>, each\u00a0<strong>stockholder will have two or three shares<\/strong>, respectively,\u00a0<strong>after the split.<\/strong><\/li>\n<li>The\u00a0<strong>number of shares increases<\/strong>, but the\u00a0<strong>price per share goes down in proportion<\/strong>.<\/li>\n<li><strong>Why is a stock split done?<\/strong>\n<ul>\n<li>It is done to\u00a0<strong>infuse liquidity<\/strong> and to\u00a0<strong>make shares affordable<\/strong> for various investors who could not buy the shares of that company before due to high prices.<\/li>\n<li>It is sometimes\u00a0<strong>aimed at helping a company meet the minimum requirements to remain listed\u00a0<\/strong>on an exchange. This is\u00a0<strong>because<\/strong>\u00a0<strong>some stock indexes are price-weighted,<\/strong> meaning a company wishing to join the index would need to have, among other criteria, a price that falls within a certain band.\u00a0<\/li>\n<\/ul>\n<\/li>\n<li><strong>What is a Reverse Stock Split?<\/strong>\n<ul>\n<li>It is the opposite transaction, in which a co<strong>mpany lowers, instead of increasing, the number of shares outstanding<\/strong>,\u00a0<strong>raising the share price accordingly.<\/strong><\/li>\n<li>The\u00a0<strong>total value\u00a0<\/strong>of your shares\u00a0<strong>would remain consistent.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1) What is Market Capitalization?<\/h3>\n<p>Market cap\u2014or market capitalization\u2014refers to the total value of all a company&#8217;s shares of stock. It is calculated by multiplying the price of a stock by its total number of outstanding shares.\u00a0<\/p>\n<p><strong>Source:<\/strong> <a href=\"https:\/\/www.cnbctv18.com\/market\/sigachi-industries-stock-split-shares-begin-trading-ex-split-18000461.htm\" target=\"_blank\" rel=\"noopener noreferrer nofollow\"><u>Sigachi Industries announces 10:1 stock split, shares begin trading ex-split<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A stock split happens when a company increases the number of its shares to boost the stock&#8217;s liquidity.<\/p>\n","protected":false},"author":5,"featured_media":15912,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-15911","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/15911","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=15911"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/15911\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/15912"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=15911"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=15911"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=15911"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}