Stock split

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A stock split is an increase in the number of outstanding shares of a company's stock, such that proportionate equity of each shareholder remains the same. This requires approval from the board of directors and shareholders. A corporation whose stock is performing well may choose to split its shares, distributing additional shares to existing shareholders. The most common stock split is two-for-one, in which each share becomes two shares. So, if a company had 10 million shares outstanding before the split, it will have 20 million shares outstanding after a 2-for-1 split. The price per share immediately adjusts to reflect the stock split, since buyers and sellers of the stock all know about the stock split. Some companies decide to split their stock if the price of the stock rises significantly and is perceived to be too expensive for small investors to afford.