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Glossary Term: REVERSE SPLIT

Definition(s) for REVERSE SPLIT:


1. ) means a stock split that reduces the number of outstanding shares and proportionately increases the price per share. This leads to a proportionate decrease in the number of shares, but not the total value of shares of stock held by shareholders. Shareholders maintain the same percentage of equity as before the split. For example, a 1-for-3 split would result in stockholders owning one share for every three shares owned before the split. After the reverse split, the firm's stock price is, in this example, three times the pre-reverse split price. A firm generally institutes a reverse split to boost its stock's market price. For some, it is regarded as a way to attract investors.



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