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In a normal stock split, each share is "split" according to the terms of the deal such that you would gain more shares but the price of each share would be adjusted downward to reflect the diluted value. For example, if you had 200 shares at $50 per share and the company decided to do a 2 to 1 stock split, you would wind up with 400 shares that were each worth $25. The overall value of your portfolio does not change after a split.

In a reverse stock split, exactly the opposite effect occurs; the number of shares you have will be reduced, but the value of each share will increase. In your particular case, you would end up with 8 shares (200 / 25 = 8), but each share would now be worth $16.75 (0.67 x 25 = $16.75). The total value of your holdings will not change.

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Q: What happens if you have 200 shares at 67 cents and the company does a 25 to 1 reverse stock split?
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