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Comment by calcsam | Hacker News Reader

You now have 70 shares.

Price is expected to decrease to 1/7 of previous level.

Correct. In theory it doesn't make much of a difference (ie, 20 nickels vs 4 quarters). Investors generally perceive it to be management having a bullish outlook on stock price. And there is a small liquidity benefit (although AAPL already pretty liquid).

> In theory it doesn't make much of a difference

Options markets are where this has the most impact. In order to sell a covered call, I need to own at least 100 shares of a stock. A stock priced at $500 or higher (in the case of GOOG) makes it harder for a smaller investor to participate in the options market. Splitting the stock price makes it possible for a little guy to purchase options based on their stock holdings.

Apple started trading mini options a little while back, they're on blocks of 10 shares.

Have you traded the minis? I just looked after reading MichaelApproved's comment and the quotes I saw for the minis were way outside the standard contracts.

Well they're not usually "way outside" but yes, they are usually more expensive. Also, most brokers add a per-contract fee so that also adds to your cost basis.

If you're looking right now, it's possibly because AH trading is much more volatile.

Will the dividend paid per share also decrease by 1/7?

Yes, but math/wording not quite right. It will decrease by 6/7 (or be 1/7 of what it was).

Yep.

For the sake of the math, I'll use a 5:1 split.

Day 0: Company trading for $1/share with 100 outstanding shares -- Market cap = $100. They are offering $0.05/share dividends -- Total dividend = $5

Day 1: Stock split at 5:1

Day 2: Company trading for $0.20/share with 500 outstanding shares -- Market cap = $100. They are offering $0.01/share dividends -- Total dividend = $5

Yes. Dividends are % based.

Yes. Basically, a stock split changes nothing about the value of the stock. However, it might lead to a slight rise in the stock price since small investors will now find it easier to buy, and so total demand for the stock might be a bit higher.

This article has a little more information, stating that this quarter's dividend will be exactly $3.29 per share of common stock for all shareholders as of 5/12/2014.

http://www.streetinsider.com/Dividend+Hike/Apple,+Inc.+(AAPL...

The narcissist in me thinks it will go down further than 1/7th the previous price, because whenever I hear about Apple stock, it's going down. Apple sold 5 million iPhones, stock goes down; Apple announces new product, stock goes down; etc...

Wouldn't that be the pessimist in you? The narcissist in you would be bullish on you and neutral on Apple.

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