stock split

A situation in which a corporation increases the number of its stock shares that are outstanding and reduces the par, or stated value, of the stock proportionally. A stock split doesn’t alter the value of a shareholder’s earnings. A company may do a stock split when it feels that the share price of its stock is getting too high and it wants to lower it. For example, a 2-for-1 stock split of a stock price that is $20 a share gives a shareholder who has 100 shares worth $2,000 a total of 200 shares that are worth $10 a share and still are valued at $2,000.