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What is the adjusted closing price?

The adjusted closing price is a financial term used in the analysis of stocks, bonds, and other securities. It represents the price of a security at the end of a trading day, adjusted to reflect any corporate actions or events that may affect the price.

Corporate actions or events that can impact the adjusted closing price include stock splits, dividends, rights offerings, mergers, acquisitions, spin-offs, and other significant changes in the company’s capital structure. These actions can cause distortions in the price of a security and make historical price comparisons or performance analysis difficult.

To account for these corporate actions and provide a more accurate representation of the security’s value, the adjusted closing price is calculated by applying specific adjustments to the closing price of the security on each trading day.

For example, if a company undergoes a stock split where shareholders receive multiple shares for each existing share they own, the adjusted closing price would be lower to reflect the increased number of shares held by each shareholder. Similarly, if a company pays a dividend, the adjusted closing price would be reduced by the dividend amount to account for the cash distributed to shareholders.

The purpose of calculating the adjusted closing price is to provide a consistent and comparable series of prices over time that reflects the true value of the security, accounting for corporate actions that may have affected the price. This allows investors, analysts, and researchers to analyze historical price trends and calculate performance metrics accurately.

Adjusted closing prices are commonly used in technical analysis, charting, and financial modeling. They can be accessed through financial data providers, stock exchanges, or financial platforms, and are typically represented in stock price charts and historical price databases.

It’s important to note that the specific methodology for calculating adjusted closing prices may vary depending on the financial data provider or platform used. Different sources may apply slightly different adjustment factors or methodologies, so it’s crucial to understand the specific adjustments made and their implications when working with adjusted closing prices for analysis or decision-making purposes.

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