Stock Split - An issue of additional shares of stock to current investors. A split does nothing to intrinsic the value of the investment. Companies often prefer to maintain a stock price within a certain range and therefore will, for example, issue 2 shares of new stock for every share of stock current held when the price moves beyond the range they would like to see. This will result in the investor having twice as many shares of stock worth twice as much
- pre split 100 shares @ $80 a share = $8,000
- post split 200 shares @ $40 a share = $8,000
Revesre Split - If the price falls too far companies can reverse the process. For example, issue one share of new stock for every 5 shares of existing stock
- pre revervse split 1000 shares at $2 a share = $2,000
- post reverse split 200 shares at $10 a share = $2,000
- Dividend on stock - cash payments to stock holders
- Ex-Dividend Date - the date on which the purchasers of the stock will no longer get the next dividend if they buy the stock
- Ex-Dividend - a stock that has passed the ex-dividend date and not yet paid the dividend.
- Dividend Yield - total yearly dividends divided by the stock price.
- Interest - paid on interest bearing investments such as bonds and savings accounts.
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