Lesson 12

Split, IPO, insolvency

Stock split: more shares, same value

In a split a company divides each share into several new ones, for example 1 to 10. The price falls to a tenth and you hold ten times as many shares. Your value stays the same.

IPO and insolvency

In an IPO a company becomes tradable on the exchange for the first time. New listings often swing strongly at first. If a company goes bankrupt, its share becomes worthless. That is why you spread your money across several assets.