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SPLIT OF SHARES

A split of shares, commonly known as a stock split, is a corporate action where a company increases the number of its outstanding shares while proportionally decreasing the share price. The primary goal of a stock split is to make shares more affordable for investors without altering the company's overall market capitalization. For instance, in a 2-for-1 stock split, shareholders receive two shares for each share held before the split, effectively halving the share price. Stock splits are usually implemented to enhance liquidity, broaden shareholder base, and improve market perception of the company's stock.

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A split of shares, commonly known as a stock split, is a corporate action undertaken by a company to increase the number of its outstanding shares while proportionally reducing the share price. The primary purpose of a stock split is to make the shares more accessible and affordable to a broader base of investors without affecting the overall market capitalization of the company.

Reasons for Stock Splits:

1.  Enhancing Liquidity:  By increasing the number of outstanding shares, stock splits can enhance the liquidity of the company's stock. This means there are more shares available for trading, making it easier for investors to buy and sell them.

2.  Broadening Investor Base:  Lowering the share price through a split can attract more retail investors who may find the shares more affordable. This broadens the investor base and can potentially increase demand for the stock.

3.  Improving Market Perception:  Stock splits are often seen as positive signals by investors and the market. A lower share price can make the stock appear more attractive and affordable, potentially boosting investor confidence.

4.  Adjusting to Market Norms:  Stock exchanges and regulatory requirements sometimes have minimum price or shareholding requirements for listed companies. A stock split can help a company meet these requirements without affecting its fundamental financial metrics.

In conclusion, a stock split is a strategic corporate decision aimed at enhancing liquidity, broadening investor participation, and adjusting the share price to make it more attractive to potential investors, while maintaining the company's overall market value.

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