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Old Mar 22nd, 2012, 06:57 PM   #1
shortbleu
 
 
Join Date: May 2009
Posts: 207
According to the company RPC.INC's website (Symbol RES), there was a three-for-two stocks split a few weeks ago.
The split was effected by issuing one additional share of common stock for every two shares of common stock held.

I bought 100 shares at $15 each (total value $1,500) just before the split.
Just after the split, my account shows I own 200 shares at $10 each (total value of $2,000).

I don't understand why the number of shares I own increased from 100 to 200 as the split is 3 for 2 and not 2 for 1.
I thought my account should show 150 shares at $10 each (same total value of $1,500)?

Why do I own 200 shares and not 150? I made an unrealised profit of USD 500 in the process but I don't understand why. I believe that in theory, stock splits should not create profit/loss as the increase in the number of shares should be compensated by the decrease in the price per share?
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Old Mar 22nd, 2012, 07:46 PM   #2
peilthetraveler
 
 
Join Date: Jun 2005
Posts: 7,509
Quote:
Quote from shortbleu:

According to the company RPC.INC's website (Symbol RES), there was a three-for-two stocks split a few weeks ago.
The split was effected by issuing one additional share of common stock for every two shares of common stock held.

I bought 100 shares at $15 each (total value $1,500) just before the split.
Just after the split, my account shows I own 200 shares at $10 each (total value of $2,000).

I don't understand why the number of shares I own increased from 100 to 200 as the split is 3 for 2 and not 2 for 1.
I thought my account should show 150 shares at $10 each (same total value of $1,500)?

Why do I own 200 shares and not 150? I made an unrealised profit of USD 500 in the process but I don't understand why. I believe that in theory, stock splits should not create profit/loss as the increase in the number of shares should be compensated by the decrease in the price per share?
It's likely a computer error that happened in your favor. They will catch it eventually and deduct the money(shares) from your account.
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Old Mar 22nd, 2012, 08:59 PM   #3
nocloud
 
 
Join Date: Apr 2011
Location: Boston
Posts: 68
haha, liquidate and cash out the account now!
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Old Mar 24th, 2012, 03:47 PM   #4
shortbleu
 
 
Join Date: May 2009
Posts: 207
It's been corrected to 150 shares now, so I can sleep well.
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