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Stock split and stock dividend

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What is a stock split? How is a stock split different from a stock dividend?

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Solution Summary

This response addresses the queries posed in 325 words with APA references. It begins with a discussion on what a stock split is and what a stock dividend is, along with the differences between the two.

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There is specific number of shares that are outstanding on the stock market for all the publicly-traded companies. A stock split involves an increase in the number of shares that are outstanding by issuing more shares to the existing shareholders. An example has been given to explain stock split: in a 2-for-1 stock split, an additional share is given to every shareholder with one stock. Therefore, for a company, if there are 10 million shares outstanding before the split, there will be 20 million shares outstanding after a 2-for-1 split.

Usually, those companies opt for a stock split that have seen ...

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