what really are reverse splits?



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what really are reverse splits?

3 Answer(s)


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In corporate finance, a reverse stock split or reverse split is a process by which a shares of corporate stock are effectively merged to form a smaller number of proportially more valuable shares. There are many ways to effect this; one simple way is the corporation to cancel a uniform fraction of each shareholder's shares.

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In the process of reverse split, company will merge its outstanding stocks with pre decided ratio. This will avoid investors to think that stocks are cheap and trading blindly.

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In the process of reverse split, company will merge its outstanding stocks with pre decided ratio. This will avoid investors to think that stocks are cheap and trading blindly.