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How does a company create more shares? For example, if a company was initially split into 100 shares, how could this later be stepped up to 10000?

By huruey Asked Aug 7 2009 6:13AM
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by Investors times on Aug 12, 2009 at 11:26 pm Permalink

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If the company want to raise funds the the company can issue more shares. This is done so that the company can use the money to grow further or to pay debt.

A company split shares of the value of the shares has increase to such a value that it is difficult to issue more shares at such a high price. Then the company split a share.
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Avatar huruey Aug, 17 2009 at 04:04 PM
Thanks for the reply, but I don't think that answers my question. How do shares get split? The reason I ask is because it would surely damage the value of shares for existing shareholders...
Avatar Investors times Aug, 21 2009 at 09:43 PM
It would not damage the value of the existing shareholder because your share of the profit will remain the same. If your share was 1of 5 share. After split it will be 2 out of ten. You will get the same share of profit. Same for new shareholder . He would have to buy two times the number of shares.The reason for split is that the human brain would prefer to buy 20 shares at 50 rather than 1 share at 1000. Even though the share of profit is the same and it cost the same.If you are having a split no need to worry.If the company issue more shares buy them.


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