EDU Articles
Learn about investing, trading, retirement, banking, personal finance and more.
What is a Reverse Stock Split?
A reverse stock split consolidates stocks at a certain ratio and reduces the number of shares outstanding while increasing the value of each share, as opposed to a regular stock split, which divides existing stocks into more shares which are worth less apiece.
A normal stock split, which increases the number of shares an investor owns without increasing the total value of his or her interest in the company, has the benefit of increasing liquidity with the shares and possibly narrowing the bid/ask spread. A reverse stock split reduces the number of shares in circulation by effectively combining the existing shares at a certain ratio (such as, 2 shares now equals 1 share).
A reverse split tends to suggest that a stock price has declined, as one reason to merge shares is to satisfy an exchange’s minimum stock price (such as $5 per share), so reverse splits have a negative connotation. A shareholder who does not hold enough of the old shares to own one of the new larger shares will receive a cash settlement instead.
This can reduce the number of shareholders and possibly help a company fit into a different regulatory category with the SEC and possibly reduce the company’s reporting requirements. It is also called a stock merge.
What is a covered straddle?
A covered straddle is a bullish option strategy, where the investors writes the same number of puts and calls with...
What are Periodic Distributions from a 401(k)?
Periodic distribution is a planned intermittent payment of cash from a 401(k)
How Should I Invest Money in My IRA?
There are many ways to invest, but there is no definite answer. General rules focus on diversification of assets
What happens if I don’t diversify my portfolio sufficiently?
Over time, a less diversified approach can hurt an investor’s chance of achieving the long-term desired result for retirement
What are Earnings per Share (EPS)?
EPS is derived by taking the net income of a company and dividing it by the share price. That gives an individual...
What is 'Pro Forma'?
In a financial statement, “Pro Forma” refers to how figures are presented either in present form or as projections
What is EBITDA?
EBITDA is used as a ballpark figure for where the company’s earnings are without these expenses. EBITDA has no standard
What is a Home Office Expense?
How Do You Set Up a Bitcoin Miner?
Setting up a bitcoin miner can be as simple as downloading a mining client program, or as complicated as building a custom rig
What are Multichains and Sidechains?
Sidechains are blockchains which handle assets off of a main blockchain and are able to return them to the main blockchain at a future date