Stock Splits

If a company's stock price has increased too much it might issue a stock split for instance 2 for 1 to half its stock price. For instance, if you have 10 units of a stock trading at $60(total worth $600), after the 2 for 1 stock split, you will own 20 units of stock for $30 but the total value of your investment will stay the same($600). Normally, this is taken as a positive sign that the company is doing well. Reasons for stock splits could be several, including making it more affordable for small investors. Another perception is that a small priced stock will increase more faster than a high priced stock.




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