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Asked a question 2 years ago

How does share split help investors?

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Hey @Pradeep Sharma17,

Stock Split is a corporate action where shares are issued to the existing shareholders in proportion to their current holdings. Basically, an investor would be given with one share for each share held by him. (1:1 ratio). Hence, the market capitalization of the company remains the same whereas the number of outstanding shares in the market increases. 

The primary objective of stock split is to make shares seem more affordable to small investors. A stock split can result in price increase of the share followed by an immediate decrease. 

The decision is usually taken by the Board when they feel that the prices have gone too high or are beyond the price levels of similar companies in the sector. 

Hope this helps! 

 

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