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2:1 Stock Split Formula:
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A 2:1 stock split is a corporate action where a company doubles the number of its outstanding shares by issuing one additional share for each existing share. The price per share is halved to maintain the same market capitalization.
The calculator uses the 2:1 stock split formula:
Where:
Explanation: The total market value remains unchanged after a stock split. The company's market capitalization before and after the split remains the same.
Details: Understanding stock splits is crucial for investors to accurately track their investment positions, calculate cost basis, and understand how corporate actions affect their portfolio value.
Tips: Enter the number of shares you own before the split and the pre-split price per share. Both values must be positive numbers.
Q1: Why do companies perform stock splits?
A: Companies often split their stock to make shares more affordable to small investors, increase liquidity, and potentially make the stock more attractive.
Q2: Does a stock split change the value of my investment?
A: No, the total value of your investment remains the same immediately after a stock split. You own more shares, but each share is worth proportionally less.
Q3: How does a stock split affect my cost basis?
A: Your cost basis per share is halved in a 2:1 split. If you originally bought 100 shares at $100 each, after a 2:1 split you'll have 200 shares with a cost basis of $50 each.
Q4: Are there tax implications for a stock split?
A: No, stock splits are not taxable events. You don't realize any gains or losses from the split itself.
Q5: What's the difference between a stock split and a stock dividend?
A: While both increase the number of shares, a stock split is a proportional increase (e.g., 2:1) while a stock dividend is typically a smaller percentage increase (e.g., 10%).