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# Stock Dividends, Splits and Reverse Splits

Research Web sites that contain examples of stock dividends, stock splits, and reverse splits. Yahoo Finance at http://finance.yahoo.com is a good starting point for locating these Web sites.

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1) A description of the Web site examples you found, including the location (URLs) of the Web sites;
2) Definitions of stock dividends, stock splits, reverse splits, and effects on per share calculations;
3) A discussion about the reasons for stock dividends, stock splits, and reverse splits;
4) An explanation of how stock dividends, stock splits, and reverse splits affect the firm and the investor.

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Examples of the Stock dividend, Stock splits and Reverse splits

Stock Dividend: The practical example given in the About.com depicts that the company ABC's market capitalization remains same after issuing the stock dividend to the investors. The description about the example is as follows: Before issuing the stock dividend the common stock of the company is 1millon shares and its market price= \$100 per share, market capitalization of the ABC is \$100million. The company has 5 investors and each holding 200,000 shares each. Now, the management of the company issues 20% stock dividend. After issuing the stock dividend the position of investors that each will hold 40,000 shares more i.e. (20% of 1millon/5= 40,000) and total number of shares is equal to 240,000 each. Now the common stock of the ABC is 1.2millon and market price is equal to \$83.33 due to the fall in the value of each share. Now, the investors own are 240,000 shares @ \$83.33. After this the capitalization rate is remained unchanged.