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How is the float on a stock calculated?

i.e. a stock has 20 million shares but a float of only 7 million. how is the 7 million number calculated?

1 Answer

The float represents the number of the company's shares that are tradable without any restrictions.
This is the total number of shares publicly owned and available for trading. The number is calculated by subtracting the number of restricted shares from outstanding shares.

The term outstanding shares refer to the total number of shares. Restricted shares are shares that cannot be traded without permission by the SEC. This type of shares is often given to insiders as part of their salaries.

Therefore, if the total number of shares is 20 million, and the float is 7 million, 13 million restricted shares must have been deducted.

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