Definition of Fractional share:
Less than one share of stock, used as an accounting entry in situations such as dividend reinvestment plans.
Less than one full share of equity is called a fractional share. Such shares may be the result of stock splits, dividend reinvestment plans (DRIPs), or similar corporate actions. Typically, fractional shares aren't available from the stock market, and while they have value to investors, they are also difficult to sell.
Fractional shares come about in a number of ways, including dividend reinvestment plans, stock splits, mergers, and acquisitions.
How to use Fractional share in a sentence?
- Capital gains, dollar-cost averaging, and dividend reinvestment plans often leave the investor with fractional shares.
- A fractional share is a portion of an equity stock that is less than one full share.
- Fractional shares often result from stock splits, which don't always result in an even number of shares.
- Fractional shares don't trade on the open market; the only way to sell fractional shares is through a major brokerage.
- Mergers or acquisitions create fractional shares, as companies combine new common stock using a predetermined ratio.
Meaning of Fractional share & Fractional share Definition