Investopedia

Continue to Site »

Fractional Share

Filed Under »
Dictionary Says

Definition of 'Fractional Share'

A share of equity that is less than one full share. Fractional shares usually come about from stock splits, dividend reinvestment plans (DRIPs) and similar corporate actions. Normally, fractional shares cannot be acquired from the market.
Investopedia Says

Investopedia explains 'Fractional Share'

Fractional shares can be created in a situation where a company has a 3-for-2 stock split. Suppose you have three shares of XYZ Corp. and XYZ has a 3-for-2 stock split. In this case, you should get an extra 1.5 shares, which would be 4.5 shares total. Normally, you can't buy half a share in the stock market, but in this case, you could end up with a fractional share.

Most companies tend to round up to the nearest whole number of shares when fractional shares occur. In the above example, XYZ Corp. could opt to round up the 0.5 share to leave you with a full five shares.

Articles Of Interest

  1.

    The Merger - What To Do When Companies Converge

    Learn how to invest in companies before, during and after they join together.

  2. Trading Divergences In Forex

    We compare the results of two forex trades based on MACD histogram divergences.

  3. What Are Corporate Actions?

    Be a savvy investor - learn how corporate actions affect you as a shareholder.

  4. Understanding Stock Splits

    We explain what they are, the thinking behind them as well as their results.

  5. What is a stock split? Why do stocks split?

    All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision by the company's board of directors to increase the number of shares ...

  6. What is a stock ticker?

    A stock ticker is a report of the price for certain securities, updated continuously throughout the trading session by the various stock exchanges. A "tick" is any change in price, whether that ...

  7. Institutional Investors

    Learn more about the advantages that financial institutions enjoy when buying and selling securities.

  8. Weighted Average

    Learn how to weigh the relative importances of data points in a calculated average.

  9. Bid-Ask Spread

    Find out more about this frequently referenced, but often misunderstood, term used to describe the price at which a stock is bought or sold at.

  10. Why Is Liquidity Important?

    Learn more on why liquidity is important to consider when examining a stock, next to its share price.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  2. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  3. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  4. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  5. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  6. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.
Trading Center