Par value

Definition

Par value is the nominal or face value of a stock or bond, as stated in the corporate charter. It is the minimum price at which shares can be issued and does not reflect the market value.

5 Must Know Facts For Your Next Test

1. Par value is typically set very low to avoid legal issues with issuing shares below this amount.
2. It is different from market value, which fluctuates based on supply and demand.
3. Par value of common stock may be as low as $0.01 per share.
4. Preferred stocks often have a higher par value than common stocks.
5. Some modern corporations issue no-par stock, which has no stated face value.

Review Questions

Related terms

Market Value:

The current price at which an asset or service can be bought or sold.

No-Par Stock: Stock issued without a nominal or face value, giving flexibility in pricing.

Authorized Shares: The maximum number of shares that a corporation is legally allowed to issue.