Understanding Stock Splits: Their Mechanics and the risks to Financial Stability and the Economy
Stock splits are a common corporate action wherein a company increases the number of its shares while proportionally reducing the stock price. The company’s market capitalization remains unchanged, but shareholders end up with more shares. For example, in a 2-for-1 stock split, every existing share is divided into two, and shareholders receive an additional share for each one they hold, while the price per share is halved.
Financial Derivatives and Their Risks for Financial and Economic Stability
Financial derivatives have revolutionized modern finance by providing tools for risk management, speculation, and investment. However, their widespread use also brings significant risks to financial and economic stability. This essay delves into the complex world of financial derivatives, exploring their…
