Stock Split

Welcome students, today we will be discussing a significant concept in corporate finance - stock splits. A stock split is a corporate action that increases the number of securities issued and outstanding, without the company receiving any additional compensation. In many jurisdictions, this action requires approval from the security holders. This means that each security holder will receive more securities, in proportion to the amount they already own, on a specific record date. This ensures that their percentage ownership of the company remains the same. For instance, a two-for-one stock split would result in the issuance of two new securities for every old security held by the investors. This is a common practice used by companies to make their stocks more affordable and increase their liquidity in the market. I hope this helps in understanding the concept of stock splits.