Basic Introduction to Stock Split

Stock Split:

The stock split is considered to be a very important corporate event, and it also has a huge impact on the stock market and the investor.

Stock Split largely resembles the process of issuing bonus shares. Stock Split will increase the number of shares in the company, but there will be no difference in the market capitalization and the investment value invested by the investor. The stock split is done in a certain proportion, such as 1: 1, or 1: 2 or 1: 5

The face value of the stock is divided by stock split, and as soon as face value changes the number of the company's total share changes, but its total capital does not matter.

Advantages of Company and Investors from Stock Split

1. The biggest advantage of the company to stock split is that the market value and face value of the shares of the company decrease both, and by which the company's shares seem to be very cheap for new investors. And the common investors can also invest easily.
   The advantage from investor's point of view is that - the old investor has more shares in the company's share, which benefit he gets in the form of the dividend.
2. Another major advantage to the company is the stock split, that the decrease in the stock price of the company and the increase in the number of shares decreases the liquidity problem in the company's stock.