Stock Split

Description and Definition of Stock Split

There are two types of stock splits – forward splits and reverse splits. Forward splits increase the number of shares outstanding. For instance, in a Forward Split, if a stock splits 2-for-1, and you hold 1 share before the split, after the split you hold 2 shares worth one half the price per share. Reverse splits reduce the number of shares outstanding. In a Reverse Split just the opposite happens. If you hold 2 shares before the split, and the stock splits 1-for-2, after the split you hold 1 share worth twice the price per share.

Resources

See Also

Further Reading

• Stock Split in the West's Tax Law Dictionary
• Stock Split in “A Dictionary of Taxation”