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Reverse stock split

• A method used to raise the market price of a firm's stock by exchanging a certain number of outstanding shares for one new share of stock.

• A proportionate decrease in the number of shares, but not the value of shares of stock held by shareholders. Shareholders maintain the same percentage of equity as before the split. For example, a 1-for-3 split would result in stockholders owning 1 share for every 3 shares owned before the split. After the reverse split, the firm's stock price is, in this example, worth three times the pre-reverse split price. A firm generally institutes a reverse split to boost its stock's market price and attract investors.

 
 

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