Editing Stock split (section)

==Effect on historical charts==
When a stock splits, many charts show it similarly to a [[dividend]] payout and therefore do not show a dramatic dip in price. Taking the same example as above, a company with 100 shares of stock priced at $50 per share. The company splits its stock 2-for-1. There are now 200 shares of stock and each shareholder holds twice as many shares.

The price of each share is adjusted to $25. As a result, when looking at a historical chart, one might expect to see the stock dropping from $50 to $25. To avoid these discontinuities, many charts use what is known as an adjusted share price; that is, they divide all closing prices before the split by the split ratio. Thus, when looking at the charts it will seem as if the price was always $25. Both the Yahoo! historical price charts<ref>[https://finance.yahoo.com/q/hp?s=CI&a=05&b=1&c=2007&d=05&e=8&f=2007&g=d Yahoo Finance Historical Charts]</ref> and the Google historical price charts<ref>[https://web.archive.org/web/20080220005406/http://finance.google.com/finance/historical?cid=6276&startdate=Jun++1%2C+2007&enddate=Jun++8%2C+2007 Google Finance Historical Charts]</ref> show the adjusted close prices.