- A fractional share is a part of the share capital that is less than one full share.
- Fractional shares often result from stock splits that do not always result in an even number of shares.
- Mergers or acquisitions create fractional shares as companies combine new shares of common stock using a predetermined ratio.
- Capital gains, dollar value averaging and dividend reinvestment plans often leave the investor with fractional stocks.
- Fractional shares are not traded on the open market; the only way to sell fractional shares is through a large brokerage company.