Explain what is meant by a three-for-one split, and give an example.?

Answer 1

when corporations decide on a stock split, they will give you 3 shares for every 1 share that you own (in your example).

you will own 3 times as many shares, however your percentage ownership remains the same since all other shareholders will have 3 times the number of their original shares.

companies typically do this when their stock price is escalating. by splitting the stock in a 3 for 1 ratio, the stock price will be 1/3 of the original price. however, the total market capitalization will remain the same.

so let's say you own 1 share of microsoft at $60. after the split, you will own 3 shares of microsoft at $20 per share. your total investment is the same.

Answer 2

It is a term that applies to stock

For every stock owned the company issues three new shares

Usually done when a company is doing very well and they want to lower the price of their stock on the open market but still reflect an increase in worth.

Let's say you own 100 shares and the value of each is $100 dollars - the total worth is $10,000 after the split you would own 300 shares, but the value of each might go down to $35 - the total worth would be $10,500. Congratulations you just made $500 in profit (assuming you sell them). The idea is that in a relatively short time the stock will go up in price, probably not to the original $100, but perhaps to $50 and then your stock would be worth $15,000

Answer 3

it means for every one share of common stock, there would now be three. Say you own 100 shares of Coca-Cola, valued at $99 per share; after a 3-for-1 split, you will now have 300 shares of Coca-Cola stock valued at $33 per share.