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Tuesday, July 19, 2011

Examples of Stock Splits

A stock split increases the number of shares outstanding, thereby reducing the price per share such that the before and after market capitalization will remain the same.

Example 1 (2-for-1 Stock Split):
CPU Company has 10,000 shares of stock priced at $20 per share. The market capitalization is 10,000 * $20 = $200,000.
Later, the company decided to execute a 2-for-1 stock split. After the split,

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